Press Conference by Yuji Yamamoto, Minister for Financial Services

(Excerpt)

June 8, 2007

[Minister's Statement]

Good morning. I would like to report on the Cabinet meeting. Minister Takaichi made remarks on an outline of comprehensive anti-suicide measures. The minister also reported on the conditions surrounding our aging society and the implementation of aging society measures in FY 2006 and on such measures in FY 2007. The Minister of Agriculture, Forestry and Fisheries made remarks on a long-term fishing port and fishing ground development program. The Minister of Land, Infrastructure and Transport made remarks on FY 2006 land trends and FY 2007 basic land-related measures. The Minister of Internal Affairs and Communications reported on the FY 2006 policy evaluation and reflection of such evaluations in policies. The Minister of Finance made remarks on proposals at the Fiscal System Council.

[Questions and Answers]

Q.

A media report today claimed that the Financial Services Agency plans to announce administrative sanctions as early as next week against Mitsubishi UFJ Financial Group Inc., suspecting the group of implementing inappropriate practices regarding over-the-counter sales of investment trust funds. Minister, will you make any comments on the relevant facts?

A.

I am aware of such media report. We have not implemented any administrative sanctions against the bank. I would like to ask you to understand that I cannot make any comments on this case at present.

Q.

I would like to ask a question about Daiwa Toshi Kanzai. On June 6, the Osaka District Court issued a ruling admitting the government's responsibility. Would you comment on your impression of the ruling and future developments, including government decisions in regards to filing an appeal against the ruling?

A.

I greatly deplore the ruling inasmuch as it did not endorse the government's position. I would like to make a decision on how to respond to the ruling after having examined the details of the ruling and consulted with the relevant authorities. We will consider whether or not to file an appeal. Given that any appeal must be filed within two weeks of the delivery of the written ruling, we will have to make a decision by June 20. That's about it in regards to this matter.

Q.

Regarding banks' over-the-counter sales of investment trust funds, it seems that banks have increased their sales of such funds. On various occasions, however, it is believed that the banks have failed to provide adequate information and that some customers have failed to fully recognize the risks of losses inherent to products yielding higher returns than deposits. Minister, what do you think about these problems? How will the FSA address them?

A.

I have consulted with bankers on these problems both officially and unofficially. Through these consultations, I have asked them to give priority to explaining important matters pertaining to OTC sales of investment trust funds. As indicated by the banks' earning reports, brisk services revenue has been the backbone of their robust earnings at a time when core banking operation profits have failed to grow. Amid the uptrend in the stock market, I believe that investment trust funds have produced brisk returns and sold well. Although the present rise in returns on investment trust funds is good, banks should consider economic trends and be prepared for an economic downturn. I have made this point to bankers. In this sense, some banks have taken genuine measures in accordance with their respective business strategies. Instead of leaving branches to supervise their respective compliance with laws and regulations regarding OTC services, banks are naming head office employees to supervise OTC services at branches, and others are implementing surprise on-site inspections of branch OTC services by head office experts. Banks have been implementing various genuine plans to enhance their employees' compliance with laws and regulations. In this sense, I hope that banks will accumulate OTC sales know-how and compliance measures.

Q.

What are your views on leaks in regards to administrative sanctions prior to their announcement?

A.

I greatly deplore such developments. This could be related to confidentiality obligations and violations of the National Civil Service Law. If the FSA is involved in such leaks, such problems may emerge. In the meantime, however, there are parties that have been subjected to such sanctions. If such leaks emerge from any such parties, I may doubt if the parties really feel responsible for being subjected to administrative sanctions. In this sense, I think information leaks of any kind should be strictly controlled.

(End)