Press Conference by the Commissioner

(Excerpt)

August 23 , 2004

Q.

It has been announced that the FSA will conduct special inspections covering the September 2004 period. What points are the priorities in these inspections?

A.

First of all, the FSA has given major banks prior notice of special inspections covering the September 2004 period. We intend to carry out special inspections in this period for the first time in addition to follow-ups of prior special inspections as before. Since the special inspections this time are regarded as means to ensure the accomplishment of the ''Program for Financial Revival'', we consider that they are more important than before. As for the points of emphasis, firstly, we intend to lay stress on examining the adequacy of revitalization plans of debtors so that such plans do not cause postponing the solution of their problems. Though examination of the adequacy of revitalization plans from such a perspective has been also made during the past special inspections, this point is considered to be of particular importance with a view to ensuring the accomplishment of the ''Program''. Secondly, we intend to take necessary measures before and after the special inspections in order to enhance their effectiveness. The measures to be taken before the inspections include full consideration of the results of the previous special inspections for the March 2004 period. Also, we will fully reflect upon the results from ''inspections focused on bank's credit risk management for large borrowers'' which were conducted just before the present special inspections. Furthermore, we take full account of the results of hearings, which were conducted after the credit risk management inspections, on banks' recognition, views and improvement measures concerning the areas pointed out by the inspections, based upon reports required under the Article 24 of the Banking Law. Likewise, we will make adequate preparations and reasonably identify problems prior to the inspections, and then check them during inspections. After the special inspections, as we did in the case of the previous special inspections, we will conduct additional ''inspections focused on bank's credit risk management for large borrowers'' if necessary. With these measures, we intend to encourage banks in a timely manner to establish appropriate review and management systems for large debtors and borrowers whose financial conditions are deteriorating.