Press Conference by Shozaburo Jimi, Minister for Financial Services

(Excerpt)

(Tuesday, April 12, 2011, from 9:31 a.m. to 9:41 a.m.)

[Opening Remarks by Minister Jimi]

Good morning.

I do not have anything particular to report to you.

[Questions & Answers]

Q.

Yesterday, Sendai Bank, a second-tier regional bank, announced that it was considering applying for the injection of public funds based on the Act on Special Measures for Strengthening Financial Functions, a move which apparently came in response to the impact of the earthquake. What do you think of this announcement, and do you expect that this move will spread?

A.

I know that yesterday, on April 11, Sendai Bank and Kirayaka Bank announced the postponement of their business integration plan, and at the same time, Sendai Bank announced that it will start considering a governmental capital injection based on the Act on Special Measures for Strengthening Financial Functions. Business integration and capital policy are matters concerning management decisions of individual financial institutions. However, I understand that the postponement of the business integration plan and the consideration of governmental capital injection based on the Act on Special Measures for Strengthening Financial Functions represent the intention of these banks to - this is the important point - do their best, as financial institutions with close ties to the local community, to support the local economy toward post-earthquake reconstruction. Therefore, the Financial Services Agency (FSA) has high regard for their decision. The FSA will positively respond to Sendai bank's request for consultation about governmental capital injection and if the bank applies for capital injection, the FSA will quickly screen the application in accordance with relevant laws and regulations.

Regarding the Act on Special Measures for Strengthening Financial Functions, financial institutions and borrower companies in the disaster areas have been directly or indirectly damaged very much as you know, so we have added provisions for special cases applicable the disaster areas and I am considering the possibility of extending the deadline for the application under the Act on Special Measures for Strengthening Financial Functions, which is set for March 31 next year, as I emphasized at my previous press conference that was held after Friday's cabinet meeting, and newspapers reported on that. A month after the earthquake, it is very important to shift emphasis from restoration to reconstruction, and I have very high regard for Sendai Bank's announcement, which was made as if to respond to my comments at that press conference. I believe that it is an important mission of politicians to ensure that the public and private sectors work together to do their best for the reconstruction of local communities.

Q.

Regarding the selection of the sponsor of Takefuji, to which the Corporate Reorganization Act has been applied, A&P Financial of South Korea has acquired the priority negotiation right. This matter has reached this point after twists and turns, as bidding was postponed during the selection process and one bidder withdrew in the stage of the final bidding. Could you comment on that?

A.

I know that, since Tokyo District Court decided the start of the corporate procedure for Takefuji in October last year, the company has been implementing the procedure with the involvement of the court. Although I am aware that the administrator of Takefuji announced a decision to give the priority negotiation right to A&P Financial Co., Ltd., the FSA will refrain from making comments, as this procedure involves the judicial authority and is based on the Corporate Reorganization Act.

Q.

When you talked about Sendai Bank earlier, you said that if an application for public funds is made, the FSA will quickly screen it. Do you have any idea of how long the screening period will be, although that may not be clear unless you look at the content of the application?

A.

When an application is made, we will quickly screen it in accordance with relevant laws and regulations, as I said earlier. This will not be a matter of months. When an application is made, we will screen it as soon as possible, as we face a huge disaster involving the earthquake and tsunami as well as the nuclear power station accident. As for the specific period of time it will take, when an application is made, we will of course quickly screen it in accordance with relevant laws and regulations. It is up to the judgment of banks' managers to make a decision whether to make an application. In any case, I have high regard for the announced plan to consider an application, as I mentioned earlier.

Q.

In relation to Sendai Bank, what measures is the FSA considering with regard to the improvement of a legal framework, for example, in order to create a favorable environment for financial institutions to receive public funds?

A.

I cited one example at my previous press conference that was held on Friday. The FSA is now working hard on how to achieve the greatest possible effects. The one example that I mentioned is that before the previous amendment, it was required that the responsibility of the management team of a bank receiving public funds be pursued since the funds are covered mostly by the taxpayer's money. However, that act, which had a sunset clause, was abolished. Next, after the Lehman shock, the amended Act on Special Measures for Strengthening Financial Functions, which relaxed that requirement, was enacted under the Aso cabinet.

This time, the huge natural disaster is beyond the efforts of private-sector managers. Therefore, their responsibility will not be pursued, as I said. I have agreed with the FSA staff on that point, and we have registered a relevant bill for submission to the current Diet session. However, the details have not yet fully been fixed. I am sure that this is an absolutely necessary law. I would also appreciate any advice from you that may benefit the people and companies in the disaster areas. With some details still undecided, we are working hard to form the outline. As I said just now, we will make an amendment so as not to require the pursuit of the responsibility of the management team, since the law will be more practical in that way.

(End)