Press Conference by the Commissioner

(Excerpt)

15 October, 2001

Q.

Last week, you revealed that in effect, special inspections would start by the end of this month. Please elaborate on the objectives of the special inspections.

A.

Special inspections were hammered out by the Financial Services Agency as the centerpiece of the Advanced Reform Program for structural reform, especially as a measure that will contribute toward the structural reform of the financial sector. Considering the purpose of the Advanced Reform Program, we believe taht it is natural to carry out such inspections as soon as possible. Last week, I did mention that I would like to start conducting inspections immediately. We intend to start the special inspections by the end of this month, as Mr. Hakuo Yanagisawa, Minister for Financial Services officially declared following my comments.

The objective of these inspections is, as we have already explained on a number of occasions, to focus on the debtors, in contrast with normal inspections that focus on banks. We will focus on debtor companies, against which recent market signals including stock price, credit rating etc., are remarkably changing, and inspect the main banks and the next ranked banks which are financing the borrowers. As Mr. Yanagisawa has explained a number of times at the Diet session, in the case of normal inspections, the debtor classification of the company concerned tends to merely reflect its substantially-outdated status. The most important purpose is that the status of the debtor company at the tome of conducting the inspection be reflected immediately in the debtor classification, so that cases like Mycal will not be repeated.

Q.

In concrete terms, how will special inspections be carried out, and how will the results be disclosed? How will the mass media be informed, and what kind of explanation will be given? How long will the special inspections continue? Please state your current position on these issues.

A.

Special inspections are indeed special inspections. In the case of normal inspections, I believe the inspection bureau tells you who has been inspected with if asked. However, as special inspections focus on the debtors, we need to be extremely cautious of circulating rumors as regards the debtors concerned. Special inspections will be treated outside the scope of normal inspections. In other words, we believe that they will not be subject to disclosure or any transparency requirements with respect to the media, and we request your cooperation in this regard.

As with how the results will be revealed -the banks will disclose the financial information including losses due to the disposal of non-performing loans, at the end of the financial year in various ways. The results of the inspections will properly be reflected in that manner.