Press Conference by Shozaburo Jimi, Minister for Financial Services

(Excerpt)

(Friday, January 27, 2012, from 9:37 a.m. to 9:44 a.m.)

[Opening Remarks by Minister Jimi]

Today, I do not have anything particular to announce.

[Questions & Answers]

Q.

At a meeting yesterday of the Director Generals of the Local Finance Bureaus, I understand that the conditions of regional economies and financing were reported. How do you view the conditions?

A.

I regret to say I attended yesterday's meeting of the Director Generals of the Local Finance Bureaus only at its beginning to make an opening speech.

At the meeting, the Director Generals reported that business conditions for regional small and medium-size enterprises (SMEs) are still difficult despite generally showing signs of improvement, and concerns were expressed over the impact of the yen's prolonged strength and the European fiscal and financial problems. I understand that in light of this difficult situation, financial institutions in each region are continuing efforts to support regional SMEs in cooperation with other organizations by using corporate rehabilitation support consultation forums.

Cooperation is particularly important for the Local Finance Bureaus as well, and I hope that the bureaus will make increased efforts to facilitate financing for regional SMEs while maintaining close cooperation with the local Bureaus of Economy, Trade and Industry, local governments and other relevant organizations.

Q.

In the regions struck by the Great East Japan Earthquake in particular, a moratorium has been granted for the payment for bills coming due. There has been a media report that the moratorium will be discontinued at the end of March. What is your view on that?

A.

Regarding the timing of discontinuing the moratorium, I understand that the Japanese Bankers Association is appropriately conducting deliberation while taking account of how the measure has been used as well as future needs.

Q.

Today, a general meeting of the Financial System Council will be held. What will be the main agenda?

A.

At today's general meeting of the Financial System Council, the findings of deliberations last December by the working group on the regulation of group management of insurance companies and the working group on insider trade regulation are scheduled to be reported.

I would presume that you would like to know on what themes I will ask for deliberation by the council. However, as you know, it is so arranged that I, as the Minister for Financial Services, as well as the Senior Vice Minister and the Parliamentary Secretary should first tell the members of the Financial System Council about the themes at the general meeting of the council to be held this evening. So, I would like to refrain from making comments for now.

Regarding the regulation of insurance companies, there are differences between Japanese and foreign regulations particularly when it comes to M&As between Japanese and foreign insurance companies. In cases where a foreign insurance company controls various subsidiaries, the differences in regulation make it difficult for a Japanese insurance company to conclude an M&A deal, as I mentioned at a previous press conference. In the ongoing globalization, the strong yen in particular has severely hurt Japanese exporting companies. However, the strong yen also brings benefits, so various companies are apparently concluding various M&A deals by actively taking advantage of those benefits. That will be on the agenda of today's meeting.

As for insider trade regulation, holding companies are generally small in size. If a holding company owns real estate and stock holdings, for example, and real estate and stock prices fluctuate, that would lead to exaggerated fluctuations. It would not be practical to regard such matters as material information concerning insider trade. Holding companies themselves are generally not large in size, so in many cases, it would not be practical to apply insider trade regulation, as I said previously. We have that in mind as an important issue.

As we are going to hear from the council this evening, it would be inappropriate for me to make comments at this time.

Q.

I have a related question. This morning, it was reported that regulation would be imposed on some investment trusts. Could you comment on that?

A.

The themes on which we will ask for deliberation by the Financial System Council are something that I should tell the council's members first at the general meeting of the council to be held this evening, so, I would like to refrain from making comments for now. In any case, regarding the review of the legal framework concerning investment trusts and investment corporations, improvements of the framework are to be made by fiscal 2013 under the Action Plan that was announced two years ago, so the Financial Services Agency (FSA) will conduct vigorous deliberation.

Thank you very much.

(End)