Press Conference by the Commissioner

(Excerpt)

29 October, 2001

Q.

Last week, the ruling parties agreed on the enhancement of the functions of the Resolution and Collection Corporation (RCC). How is it perceived by the Financial Services Agency? Also, in your opinion, how will it affect the disposal of non-performing loans (NPLs) in the future?

A.

As a result of extensive discussions between the ruling parties, firstly, the RCC will be allowed to be more flexible in deciding the purchase price, that is, purchasing at the market price. Secondly, the RCC will be permitted to participate in open bidding, not only in bilateral deals. It is fair to say that it is about diversifying the means of purchasing. Thirdly, laws have been clearly defined from the entrance all the way up to the exit, including not only to the purchasing of assets and loans, but their disposal. First, as you may know, disposal methods will be diversified: this includes not only collection but also transfer. Second, disposal must be executed within three years, to the greatest extent possible. Third, the debtors' potential for recovery must promptly be identified and those who have the potential must swiftly achieve recovery.

The bill prepared by the ruling parties consists of three sections as such, in which the third section consists of 3 subsections. The Parliament's Legal Counsel Office will crystallize the bill to be submitted to the session, and I hope it will be passed. As you know, banks have been urged to dispose of NPLs classified as ''in danger of bankruptcy'' and below within 2 or 3 years. Now, it has become clear that the RCC will actually be one of the options for disposal. This is a significant step indeed from FSA's point of view.

Q.

Today is October 29. Are special inspections really going to start this month?

A.

Yes. Today, we started issuing advance notices to banks that will be subject to on-site inspections, and initiated the inspection process.

Q.

How many banks and companies will be inspected?

A.

As I explained previously, the special inspections are different from regular inspections in that they mainly focus on the debtors and are conducted to the main banks which are financing the borrowers, among other things. As there is a high risk of such debtors being targeted by rumors, we would like to refrain from commenting on the number of banks, the selection criteria and the number of debtors chosen as a result, and we request your understanding in this regard.