Press Conference by Shozaburo Jimi, Minister for Financial Services

(Excerpt)

(Tuesday, April 5, 2011, from 10:02 a.m. to 10:33 a.m.)

[Opening Remarks by Minister Jimi]

Good morning.

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

[Questions & Answers]

Q.

On April 1, the Japanese Bankers Association announced that banks across Japan will enable the use of their counters by disaster victims who do not have an account at the banks to withdraw deposits that are held in accounts at regional banks in the disaster areas. Shinkin Banks had already announced a similar measure. What do you think of these measures? Are there other measures that you would like financial institutions to take?

A.

After the recent earthquake, called the Great East Japan Earthquake, I, together with the Bank of Japan's Governor, requested deposit-taking financial institutions and insurance companies, including non-life insurance companies, on March 11 to act from the standpoint of disaster victims with regard to their withdrawal of deposits through the counters of financial institutions at which they do not have an account, as you may know well. Individual financial institutions had already voluntarily allowed deposit withdrawals by disaster victims who do not have an account with them. This time, I hear that the Japanese Bankers Association decided to introduce a similar measure for depositors of five banks located in the disaster zones. The Financial Services Agency (FSA) will continue to encourage financial institutions to give consideration to the convenience of disaster victims and flexibly allow deposit withdrawals.

Among regional banks, I understand that Toho Bank, which is the largest regional bank in Fukushima Prefecture, and Joyo Bank, which is the largest in Ibaraki Prefecture, have already voluntarily obtained the cooperation of regional banks located in areas to which people affected by the earthquake and tsunami as well as the nuclear power station accident have been evacuated in order to pay out deposits through the counters of the partner banks in light of the urgent need to ensure the convenience of such people. In any case, I hear that as this is an emergency situation and there are a large number of disaster victims, the Japanese Bankers Association is planning to have more banks pay out deposits through the counters of more banks for the convenience of disaster victims. At an informal meeting of cabinet ministers today, we talked about the cash squeeze faced by people who have been evacuated with only the barest necessities because of the tsunami. From now on, we must race against time, so cabinet ministers put forward various proposals. Apart from the issues related to banks, we agreed today that how financial support for everyday life should be provided is the most important issue politically although the circumstances vary. As disaster victims have been evacuated with nothing but the clothes on their backs, they need cash to cover their immediate expenses. The Prime Minister said that he will come up with a solution within this week. In a TV show that I came across yesterday, I saw an emotional scene in which a person with little cash on hand bought a refrigerator with the money transferred from a sister.

As most disaster victims are in a situation like that, it is very important that the government and politicians take appropriate actions from their standpoint, so I would like to continue seeking your advice and opinions. As I am responsible for financial services in particular and financial matters will grow increasingly important in relation to everyday life support, I appreciate your advice.

Q.

There has been a media report that Mitsubishi UFJ Morgan Stanley incurred losses totaling 80 billion yen related to dealing. The company is expected to report net losses when it announces the annual financial results. If the FSA is to take action, when will it do so?

A.

Although I am aware of the media report that you mentioned, I would like to refrain from commenting on matters concerning the management of a specific financial institution in principle.

However, generally speaking, it is naturally important that individual banks appropriately conduct risk management while taking account of market developments. In any case, the FSA will continue to keep careful watch on financial market developments, the financial conditions of securities companies and the status of their risk management. In particular, on March 11, I decided to keep the stock market open the following week. Because of the earthquake and tsunami, the yen appreciated sharply, while the Nikkei Average dropped by 633 yen on the first day after the earthquake and by 1,050 yen on the second day. However, it rebounded, and due to coordinated intervention by the G-7 countries, the yen declined and the stock market regained stability. When the securities market shows volatile movements as it has done recently, profits and losses tend to swing wildly due to the impact of trading in financial derivatives and other factors, so I instructed the FSA staff to carefully monitor the market.

Q.

I am Furuta from Tsushin-Bunka Shinpo. In relation to the inspection of Mizuho Bank, there has been a media report that an on-site inspection was conducted on April 4. Is that true? Also, am I correct in understanding that the FSA will conduct an inspection related to the system problem apart from a regular inspection?

A.

Last Friday, April 1, the FSA instructed Mizuho Bank to submit a report on the facts and cause of this system problem based on Article 24 of the Banking Act. The FSA will take a strict action after examining the content of the report and the results of the inspection. I would like to refrain from mentioning the specifics of the inspection and supervision of individual financial institutions. As for future actions, I would like to refrain from making comments with prejudgment.

Q.

I suppose that you can tell me whether the FSA has conducted an on-site inspection of Mizuho.

A.

As you know, on Monday, March 28, we notified the bank that we will conduct an on-site inspection based on the Banking Act, and we will conduct the inspection accordingly. However, I would like to refrain from commenting on specifics such as the timing of the inspection and the composition of the inspection team.

In any case, this is a very serious problem. As I told you earlier, Mizuho Bank is a megabank and its public nature is very important. Therefore, it is very regrettable that a system problem occurred at the bank in the midst of a major natural disaster like this. As this is a system problem, I instructed my staff to appropriately deal with this case by including in the inspection team personnel with sufficient capabilities to investigate the cause. On March 28, we issued a notice that we will conduct an on-site inspection based on law.

(End)