Press Conference by Shozaburo Jimi, Minister for Financial Services

(Excerpt)

(Friday, Sept. 30, 2011, from 10:05 a.m. to 10:18 a.m.)

[Questions & Answers]

Q.

Could you tell me about the particularly important meetings you will have during your visit to Europe starting on October 3?

A.

Before answering that question, let me make the opening statement - forgive me for sticking with formality. At today's cabinet meeting, I obtained approval for my visit to Europe from October 3 to 8.

During the coming visit, I will go to Germany, France and the United Kingdom to exchange views with government officials, among other people.

As for the purpose of this visit, in Europe, attention has been focusing on the sovereign debt problem and its impact on the financial system. Uncertainty is growing over the future course of the European and global economy, and financial markets. Under these circumstances, I would like to exchange opinions with financial officials in Europe about the European economic and financial situations, and European efforts to stabilize the financial system. In addition, I would like to exchange opinions with relevant officials about accounting standards.

Regarding postal affairs, in Germany and the United Kingdom, where demand for mail service is declining, as it is in Japan, there are postal business companies: Deutsche Post in Germany, a famous privatized postal company, and Royal Mail in the United Kingdom, the oldest postal service in the world. These companies are reforming their postal businesses in a manner suited to the circumstances of their respective countries. I would like to exchange opinions with officials of those companies about the current status of reform and corporate strategies for postal businesses and also communicate the significance of Japan's postal reform actively.

Among major officials with whom I am scheduled to meet is Governor King of the Bank of England. Although I was scheduled to meet him when I visited Europe in January this year, the meeting was cancelled because I was called back to Japan for a cabinet reshuffle. The Bank of England is the central bank of the United Kingdom. The bank's governor was scheduled to visit Japan, but the visit was cancelled as a result of the Great East Japan Earthquake of March 11. Mr. King, the Bank of England's governor, is a well known person with significant influence over the city. In Germany, I will meet officials, including Vice-President Lautenschläger of the Deutsche Bundesbank in Frankfurt, where financial institutions are concentrated.

Regarding postal affairs, I will meet with President Kurth of the Federal Network Agency, which oversees postal affairs as well as telecommunications, energy and railways, so it is somewhat like the Ministry of Posts and Communications of Japan's pre-war period. In the United Kingdom, I will meet with Mr. Davey, Minister at the Department for Business Innovation and Skills, who is in charge of postal affairs and employment relations.

I mentioned international accounting standards. In France in January, I met with Mrs. Lagarde, who has become the IMF's Managing Director. This time in France, I will meet with Chairman Haas of the French Accounting Standard Authority. In addition, I am scheduled to meet with Mr. Hoogervorst, new chairman of the IASB (International Accounting Standards Board), who formerly served as Dutch Minister of Finance. The post of IASB Chairman was long held by Mr. Tweedie, a well-known figure.

In addition to these official meetings, I would also like to exchange opinions with officials of private financial institutions about various matters.

Q.

A media report said that Sumitomo Mitsui Banking will launch a takeover bid for Promise. If a bank makes a consumer finance company a wholly owned subsidiary, how do you expect it will affect corporate management?

A.

I also read the media report that Sumitomo Mitsui Financial Group is planning to make Promise a wholly owned subsidiary. As for the factual basis of this report, I would like to refrain from making comments, as this is a matter concerning the management judgment of a specific financial group. I hear that both Sumitomo Mitsui Financial Group and Promise have issued statements saying that they have not made any decision on this matter.

I understand that Sumitomo Mitsui Financial Group holds 22% of the outstanding shares in Promise. Although the money lending market expanded to nearly 20 trillion yen at one time, it is probably worth about 10 trillion yen now that the amended Money Lending Business Act is in force. I think that there are social needs for money lending, which is a familiar business that should be sound, steady and reassuring for all people. The burden of the refunding of interest overpayments, which was determined by the Supreme Court, continues to weigh heavily on money lending companies, posing a huge challenge for their management. We fully put into force the amended Money Lending Business Act in June last year, and two days or so later, I established a follow-up team under my strong leadership. Basically, it is very important to ensure that money lending business can be conducted in a stable manner. In light of the presence of many sound money lending companies, the active efforts being made by various types of financial institutions in the consumer finance sector, and the importance of consumer loans as a business sector in other countries, I believe that there is a promising market.

I hope that deposit-taking financial institutions - basically, most of them are banks - will cooperate with money lending companies in implementing active initiatives concerning consumer loans, thereby contributing to the formation of a sound consumer loan market.

(End)