Press Conference by Shozaburo Jimi, Minister for Financial Services

(Excerpt)

(Tuesday, February 15, 2011, from 10:30 a.m. to 10:56 a.m.)

[Opening Remarks by Minister Jimi]

Today, I do not have anything particular to report to you.

[Questions & Answers]

Q.

I am Abe from FACTA.

At your the press conference before the previous one, you said that you will make an announcement concerning a review committee related to the Incubator Bank of Japan (Nihon Shinko Ginko) by the end of February. As Deposit Insurance Corporation (DIC), which is the financial receiver, intends to select the buyer by April 25, the selection will probably be made after the review committee has met once or twice. If so, I presume that the review committee will decide, apart from the selection of the buyer, whether or not it was appropriate that a banking license had been granted to the Incubator Bank of Japan when Mr. Heizo Takenaka was Minister for Financial Services. If that decision comes after the selection of the buyer, that is like putting the cart before the horse. What is your view on this?

A.

After the transfer of the business operations of Incubator Bank of Japan to the Second Bridge Bank of Japan, DIC, as the financial receiver, will have the right to pursue criminal and civil responsibility, while Resolution and Collection Corporation (RCC), which is a fully owned subsidiary of DIC, will also continue to have the same right as the receiver of non-performing assets. There is no change in the principle that the responsibility of the former management team and other people concerned will be pursued during the process of loan collection. That decision concerns the transfer of business operations to the Second Bridge Bank, not the sale to a private company, and some operations will be transferred to RCC. I am also aware of the so-called eight-month rule. Therefore, the pursuit of responsibility will not end there.

Q.

My question is how the conclusion of the review committee will be reflected in administration, regardless of the pursuit of responsibility.

A.

As I have been saying from the beginning, that will be decided dispassionately by the review committee. I hope that appropriate people will reach a satisfactory conclusion. How they will reach their conclusion is a matter to be decided by them. As I have been saying from the beginning, trust is essential to the financial sector. We will establish this committee in order to regain trust, so I do not have any preconception for the moment in my capacity as the minister in charge.

Q.

If the review committee concludes that it was not appropriate to grant a banking license and if the bank has already been sold, how will that conclusion be reflected? Will the banking license be revoked?

A.

I do not have any such preconception. I do not think it would be appropriate for me to answer a hypothetical question.

Q.

I am Oshima from Kinyu Times.

Regarding currency derivatives, are you considering disclosing the number of companies which have incurred losses and the causes of the losses? Is it possible that administrative action will be taken in the future?

A.

It is true that the Financial Services Agency has directly received various complaints from small and medium-size enterprises (SMEs) that have incurred significant losses following volatile movements in foreign exchange rates. The FSA revised the guideline for supervision regarding the sale of derivatives in 2010. The FSA is analyzing requests for consultation and complaints from companies that have incurred losses from derivative contracts and it will continue to take appropriate actions when necessary to protect customers.

As I mentioned at my previous press conference, I think that it is not appropriate for the FSA to intervene in specific civil disputes but that it is appropriate that such disputes be resolved through an ADR (alternative dispute resolution) agency.

There have been cases in which very delicate issues, such as compensation for losses, emerged as a major problem, so I think that we must act in a fair and impartial manner and that it is not appropriate for the FSA to intervene in specific civil disputes.

The Financial Instruments and Exchange Act stipulates that ADR agencies must be established for dispute resolution, so I think that it is appropriate to seek the resolution of civil disputes through ADR agencies.

Q.

I am Kataoka from Hoken Ginko Nippo.

In relation to ADR, which you mentioned just now, the status of the operation of ADR agencies was reported at a consultation meeting on financial disputes that was held yesterday. Could you make some comment on that?

A.

At the consultation meeting on financial disputes held yesterday at the FSA, a report was made on the status of the implementation of operations at designated dispute resolution agencies over the three months since last October, when the financial ADR system started full-fledged operation, as you mentioned.

According to the report, the number of complaints and disputes filed with dispute resolution agencies has generally increased since the financial ADR system started full-fledged operation. That is presumably because since the introduction of this system, various organizations, including designated dispute resolution agencies and financial institutions, have engaged in activity to raise awareness and as a result, awareness among users has grown. The FSA intends to promote activity by designated dispute resolution agencies and to ensure smooth operation of the financial ADR system by continuing to use the framework of the consultation meeting on financial disputes and by appropriately following up on the status of operations at designated dispute resolution agencies.

I presume that the questioner implicitly asked whether the dispute resolution of cases related to currency derivatives sold by banks that we discussed earlier is increasing. According to the Japanese Bankers Association, the number of disputes filed is generally increasing sharply. I hear that the number of disputes arising from the strong yen in relation to high-risk products, such as currency derivatives, is increasing. I understand that taking this situation seriously, the association plans to make efforts to strengthen institutional systems to accelerate the resolution of disputes.

The FSA will appropriately follow up on the status of the Japanese Bankers Association's efforts.

Forgive me for mentioning a personal experience but in a Diet session, I previously argued with Mr. Masuzoe, who was the Minister of Health, Labour and Welfare at the time, about lawsuits related to medical mistakes. As a doctor, I argued with Mr. Masuzoe about the difference in the treatment of medical mistakes in court between Japan and the United States and what the ADR system should be like. In this sense, I have strong interest in the ADR system.

Thank you for your kind attention.

(End)