Press Conference by Yuji Yamamoto, Minister for Financial Services

(Excerpt)

April 24, 2007

Q.

I heard Tochigi Governor Fukuda came to Tokyo yesterday for talks on the Ashikaga Bank. Governor Fukuda told a press conference that Deputy Chief Cabinet Secretary Shimomura had indicated an entity would be selected this autumn to take over Ashikaga Bank. Would you give us the FSA's comments if any on the timing for selecting the acquirer of Ashikaga Bank and the state of progress in the selection?

A.

At present, we are screening business plans submitted by candidates for the acquirer of Ashikaga Bank. At present, I cannot make any definite remark on the time when the acquirer will be selected. Given experiences with handling of past bank failures, we earlier anticipated that the selection would take around one year from the commencement of relevant procedures in September last year. There has been no change to this prediction.

Q.

Last week, the FSA's Financial System Council and the Council on Economic and Fiscal Policy presented various opinions on financial globalization. I suspect that the FSA and other government agencies may be required to make various efforts for financial globalization. Would you give your views on this matter again?

A.

As you noted, enhancement and development of international financial and capital markets became a topic at the CEFP. In this respect, a wide range of problems including institutional development must be considered. As an international finance center, Tokyo excels in urban infrastructure. We believe that Tokyo can increase its attractiveness by enhancing urban functions including transportation infrastructure and living environments. In order to improve its functions as an international finance center, Tokyo should positively develop an urban environment that is highly functional, safe and comfortable, including systems for training and accumulation of English-speaking people. In this respect, it is important to promote measures to unite private and government sector efforts through cooperation and linkage between financial administration and urban district revitalization. In this sense, the FSA plans to step up cooperation with the Headquarters for Revitalization of Central Urban Districts. Regarding regional development, a report came at a CEFP meeting on ‘‘foreign requests for development of Japan's investment climate.'‘ The third request in the report was for enhancement and development of international financial and capital markets. We then learned that the request included the ‘‘invitation of financial groups to set up regional headquarters.'‘ As a matter of fact, we interpret the financial groups as private financial institutions. They may be international financial institutions rather than domestic ones. As far as operational bases of international financial institutions are concerned, it may be important to invite foreign financial institutions to locate regional headquarters in Japan. Abstractly, this depends on the Japanese market's attractiveness upon the time of invitation. In order to create the attractiveness, the FSA may have to cooperate with other government agencies. As far as worldwide comparison of comfortable business environments for financial institutions is concerned, as I said earlier, we may have to consider a wide range of matters including zoning, highly functional buildings, sanitation and security. In this sense, the FSA would like to cooperate closely with other government agencies.

Q.

Regarding the selection of an entity to take over Ashikaga Bank, I think that the governor's requests yesterday called for more information to be disclosed. Would you give us your views about this point again?

A.

This request was not so strong. He said it would be easier to discuss the matter if there was some more information. In response, we feel that if more information is published, what we see as neutral messages from relevant people could be taken by those receiving these messages as indicating some specific wills. If so, the FSA or any other public or neutral organization involved in the selection process could fail to secure its fairness amid anticipated fierce competition among bidders. This is linked to markets' transparency, fairness and impressions. Therefore, we believe we should be cautious of releasing information. Will a conclusion coming after a full disclosure of information be seen as fair or transparent? Should we keep information thoroughly secret before releasing a conclusion and giving full explanations about the conclusion? The answers to these questions may depend on a sense of value. Given that we should give priority to the market mechanism, we believe that we should refrain from providing many data for advanced predictions or forecasts. I then told the governor that we should keep from publishing the number of candidates to take over Ashikaga Bank or their names. I believe the governor was well satisfied with our explanations.

(End)