Press Conference by the Minister for Financial Services

(Excerpt)

April 27 , 2004

There are two announcements.

Firstly, the special inspection for the bank's fiscal year ending March 2004 has been conducted since January. We have finished compiling the result and disclose it to the public today.

Secondly, we inform you that a new ''inspection focused on bank's credit risk management for large borrowers'' will be implemented.

It will target major banks whose credit risk management for large borrowers is deemed to be problematic, based on the result of examination of their reconstruction plans at this special inspection, and in consideration of subsequent interviews conducted in response to reports under the Article 24 of the Banking Law.

The purpose of this inspection is to examine whether or not the banks are taking proper action in terms of their credit risk management for large borrowers, focusing on the extent to which they have identified the actual status of large borrowers, and their involvement in developing and reviewing the reconstruction plans. The inspection is purely concerned with examining the banks' stance on credit risk management, and it does not directly determine how to treat or reconstruct specific large borrowers.

Q.

The implementation of the ''inspection focused on bank's credit risk management for large borrowers'' means that you suddenly felt the need to look into their risk management more closely as a result of the special inspections? Or have you originally had the idea as a part of the plan to enhance the inspection framework?

A.

We had long been considering how we could examine the so-called reconstruction plans, and we established ''the Special Team for Examination of Reconstruction Plans'' to examine them accordingly. Having been constantly asking ourselves how we could actually make use of them in inspection and supervision, we reached the conclusion to implement the ''inspection focused on bank's credit risk management for large borrowers'' in this manner. In that sense, it is consistent with the policies of ''the Program for Financial Revival''.