Press Conference by Tadahiro Matsushita, Minister for Financial Services

(Excerpt)

(Friday, June 8, 2012, from 10:18 a.m. to 10:33 a.m.)

[Opening Remarks by Minister Matsushita]

I attended the cabinet meeting. Before that, an informal meeting of cabinet ministers was held to discuss anti-suicide measures, so I would like to talk about that briefly.

First, Minister for Disaster Management Nakagawa reported on anti-suicide measures.

For the past 14 years, the annual number of people who took their own lives has stayed higher than 30,000. Although the number fell slightly last year, it is still at a high level, so this is a very serious problem.

In relation to the Great East Japan Earthquake, more than 1,600 people took their own lives, and investigation of the causes is ongoing, according to Minister for Reconstruction Hirano. On that, a further report will be made later.

In relation to the affairs of the Financial Services Agency (FSA), there are people who are struggling with multiple debts, and we need to continue to deal with this matter with strong concern.

In addition, the so-called FRC report (report on the specifics of measures taken for resolving failed financial institutions) was determined by the cabinet. I explained the content of the report. In relation to the status of the resolution of failed financial institutions between October 1, 2011, and March 31, 2012, the current FRC report indicates that the sound portions of the failed Incubator Bank of Japan (Nihon Shinko Ginko) should be taken over by AEON Bank and other portions should be resolved. In addition, the report describes the status of governmental capital injections based on the earthquake-related special provision of the Act on Special Measures for Strengthening Financial Functions, the finalized figure of secondary losses related to the jusen housing loan companies and the resolution of the losses.

Regarding the finalized figure of secondary losses related to the jusen housing loan companies and the resolution of the losses in particular, I made my explanations while citing specific numbers at the cabinet meeting. The amount of secondary losses was finalized at 1,401.7 billion yen. Regarding half of that amount, 700.9 billion yen, which should be shouldered by the government, the amount of profits recovered exceeded the price at which the non-performing assets were accepted, and profits totaling 166.2 billion yen from investments made by a relevant fund, the New Financial Stabilization Fund, were booked. By using these profits, we have managed to resolve the losses without any new fiscal expenditure. That is a very encouraging development.

The FSA will do its utmost to further ensure the stability of Japan's financial system.

It was in 1993 that I won a Diet seat for the first time. At that time, Diet debates were dominated by the jusen issue. Later, we had to deal with the damage by the Great Hanshin-Awaji Earthquake. I am deeply moved to think that this issue has been finally solved 15 or 16 years since then.

[Questions & Answers]

Q.

The other day, the FSA announced the extension of the flexible treatment of the capital adequacy requirement for banks that focus on domestic operations. I understand that when this measure was introduced, it was intended to stabilize the management of financial institutions after the Lehman Shock and this time, its extension is intended to bring stability in the face of the European crisis. However, the extension appears to somewhat run counter to the global trend of introducing rigorous capital adequacy requirements under the Basel regulatory regime. What are your thoughts on that?

A.

I understand that your question concerns the extension of the flexible treatment of the capital adequacy requirements for banks that focus on domestic operations.

I believe that when considering the capital adequacy requirement, it is important to keep the right balance between the soundness of the financial system and the impact on the real economy.

The situation in Europe has become uncertain, as exemplified by Greece's decision to hold a re-election on June 17, and I have the impression that the market has become unstable. In light of these circumstances, we have initiated the public comment procedure for our proposal to extend until March 30, 2014, the flexible treatment of the capital adequacy requirement for banks focusing on domestic operations, which refers to the exemption of the requirement to reflect valuation losses on “other securities” in the calculation of the capital adequacy ratio, namely to deduct the amount of such losses from the capital amount.

Q.

Major credit rating agency Fitch has downgraded government bonds issued by Spain by three notches. Moreover, China implemented an interest rate cut for the first time in three years. Could you tell me about your analysis of the background to and the impact of these two matters as an economic minister?

A.

I am worried that the economic problem and fiscal and debt crises in Europe may not be moving toward stability. However, I am hoping that Europe will take appropriate measures and strive to eliminate concern over these problems. I am strongly hoping that such efforts will resolve the problems.

Q.

What about China?

A.

Although the Chinese economy is not stalling, its growth is somewhat slowing down, according to a report from our staff and media reports. I understand that the Chinese government has taken action to support the economy for the first time in a long time, and we appreciate the action.

Q.

The government is close to a decision on the restart of Oi Nuclear Power Station in Fukui Prefecture. However, it has been pointed out in various quarters that the safety of Oi Nuclear Power Station has not been ensured. Do you think that Oi Nuclear Power Station is safe enough to be restarted?

A.

This matter has been thoroughly discussed in a recent meeting in Tottori between Minister of Environment and Nuclear Power Policy and Administration Hosono and the governors of the Kansai region. Minister Hosono said that as he is not content with the status quo, constant efforts will be made to enhance safety. I accept that statement as appropriate.

I hear that the Prime Minister will make his own statement on this matter this evening, so I will be paying close attention to it.

Q.

Are you for or against the idea of restarting Oi Nuclear Power Station when you consider how evacuees in Fukushima may feel at a time when the cause of the Fukushima nuclear power station accident has not yet been identified?

A.

I will closely examine the content of the statement to be made by the Prime Minister this evening. I expect that he will refer to that point in his statement.

Q.

In relation to anti-suicide measures, you said earlier that you are giving consideration to the multiple debt problem. Working groups of the Liberal Democratic Party and the Democratic Party of Japan are discussing the need to review the Money Lending Act once again. Former Minister Jimi's stance was that it is not necessary to review it immediately. What is your stance on that?

A.

I am aware that some groups within the ruling and opposition parties are holding discussions about the review of the amended Money Lending Act. However, I would like to refrain from commenting on policy proposals under consideration by political parties.

We understand that the current Money Lending Act was enacted with unanimous support in the Diet in December 2006 in order to implement fundamental and comprehensive measures to resolve the multiple debt problem.

Since this act was put into force, the number of people who owe five or more unsecure, non-guaranteed loans to consumer loan companies has fallen significantly compared with 2006. As of March 2007, the number of such people was 1.71 million and 440,000 as of March 2012. I understand that this law has achieved some effects, so I do not think that there is anything that should be revised immediately.

In any case, as some groups within the ruling and opposition parties are discussing this matter, I would like to keep watch on the discussion but refrain from making comments.

Thank you very much.

(End)