Press Conference by Yuji Yamamoto, Minister for Financial Services

(Excerpt)

April 27, 2007

Q.

Citigroup Inc.'s tender offer for Nikko Cordial Corp. turned out to be successful today. May I take your comments on this?

A.

I am aware that such an event has been announced. I would not like to make any comment on matters that are related to specific financial groups. Generally speaking, I hope that a realignment of financial institutions would lead to enhanced governance and high-quality management.

Q.

Former Vice Finance Minister Hayashi has been named to head a self-regulatory body of the Tokyo Stock Exchange. This appointment has been criticized as a controversial ''amakudari'' practice to give a special favor in the form of a cushy job to a former senior bureaucrat. Even within the Cabinet, Administrative Reform Minister Watanabe has criticized the appointment. May I take your comments on this?

A.

First, the appointment of the executive board members and the president should be up to the TSE and the self-regulatory body, unless a candidate's eligibility to take up such a post is questioned. Regarding the public servant system reform, the problem is the practice to take advantage of the position of public servants for forcing an entity to employ a bureaucrat or for arranging such employment. The TSE post may attract attention in some way and you may view this appointment as amounting to the problematic practice. But taking advantage of an official position for forcing an entity to employ a bureaucrat implies the government sector's pressure on the private sector. This appointment represents a request that the TSE as a private entity has made to the government sector. I believe that this does not amount to a national government official's reemployment that should be deterred. Seemingly, the former post of the vice finance minister may be a case exempt from the public servant system reform or subject to the reform. For the reasons cited earlier, however, I am concerned that, if we pay too much attention to and intervene in this appointment, we may plunge into an endless debate.

Q.

Before a ban is lifted on triangular mergers, some private sector companies are voicing worries over takeover bids from foreign firms. Amid this situation, Nikko Cordial, one of Japan's Big Three securities companies, is coming under the umbrella of a foreign firm. Would you give your comment on this?

A.

The Financial Services Agency gives priority to leading securities companies to comply with laws and regulations and appropriately fulfill their market mediation functions to realize a reliable, deep securities market and appropriately protect investors. We believe that it is important for securities companies, whether domestic or foreign, to contribute to this policy. In implementing regulatory administration, we refrain from giving different treatment to domestic and foreign financial institutions under the principle of nondiscrimination. We do not discriminate against domestic or foreign firms. As long as a company is listed on a stock exchange, shares in the firm, whether foreign or domestic, can be bought. In this sense, I think that the deal should be interpreted as falling within due expectations or assumptions.

Q.

A ban will be lifted on the triangular mergers next month. What do you think about any impact on the market?

A.

At home and abroad, one company's integration or an alliance may deepen and synergy effects may emerge. The new system would be a threat to companies that have failed to gain shareholders' confidence in regard to corporate governance and compliance with laws and regulations. A tough era is coming for companies that have failed to gain sufficient understanding about markets or take measures responding to triangular mergers. Paradoxically, however, I expect to see good effects occurring as companies grow more sensitive to efficiency and governance. Japanese companies are entering the second stage of the mega-competition era where they must grow more internationally competitive. This is my view. I would like to see you make efforts and innovations to deal with the new stage, rather than spend time worrying about it.

(End)