Press Conference by Taro Aso, Deputy Prime Minister, Minister of Finance, and Minister of State for Financial Services

(Excerpt)

(Tuesday, September 29, 2015, 10:50 am to 11:05 am)

[Questions and answers:]

Q.

I have a question about Japan Post Bank. Today, some media have reported that the Financial Services Agency has given Japan Post Bank permission to invest in funds jointly established with regional banks. Although this has been brewing for some time, could you answer two questions? First, what expectations do you have for partnerships between Japan Post Bank and regional banks and the contribution of Japan Post Bank to regional revitalization? Second, what do you think about Japan Post Bank investing in funds?

A.

I’ll refrain from commenting on the reports themselves, but if Japan Post Bank applies to engage in a new business, that application is examined in accordance with the law. In any case, I think that Japan Post Bank should be able to establish a business model that will enable it to contribute, in a complementary role to private-sector financial institutions, to things like regional revitalization. And because local networks are fairly developed, I think that the Financial Services Agency should help Japan Post Bank engage in businesses that could lead to the establishment of a new business.

Q.

I have a question about the deposit caps at Japan Post Bank and Japan Post Insurance. Yesterday, the Postal Services Privatization Committee put out a document describing its deliberations on this matter. Minister Aso and Minister of Internal Affairs and Communications Sanae Takaichi asked it to conduct such deliberations, which are currently ongoing, in July. The report just said that after opinions concerning the caps at Japan Post Bank and Japan Post Insurance had been heard, some were in agreement and some were in disagreement. It didn’t make clear the position of the Committee or when it would reach its conclusions. Minister Aso, please tell me your views on the deposit caps and your opinion on when you think a conclusion should be reached.

A.

At the moment, I’m not really thinking about when we will reach a conclusion. I know that the details of the deliberations have been made public, so from now on the Committee has to refer to the content of all the hearings it has held. I think it needs to settle on a stance in order to make postal privatization successful. Rising the value of Japan Post Bank as a company is a key factor for leading this success. Even if the cap is 20 million yen or 30 million yen, such deposits cannot be guaranteed. It will be treated the same as private-sector financial institutions, where deposit insurance provides a guarantee up to 10 million yen. When you tell them that, a lot of people say, “Eh? Isn’t Japan Post Bank different?” To which I say, “Well, no, it isn’t. It’s the same.” I have conversations like that a lot. For that reason, various discussions have to be had and those will take a certain amount of time. So is a deposit cap of 20 million yen as a business model actually necessary? I think various discussions are being had about that.

Q.

Regarding the relationships with regional banks, in Kyushu Kagoshima Bank and Higo Bank are to merge on October 1. And there are three mergers scheduled for April next year. With the population rapidly declining, some people have said that there are still too many regional banks. Minister, do you think the consolidation of regional banks will continue in the future?

A.

Higo Bank and Kagoshima Bank are almost identical to each other in terms of operations, assets, employees, and number of branches. They’re unbelievably similar, and they’re going to merge. We neither encourage nor try to stop mergers, people who are conscious that they have to think about the future of regional banks in various ways, such as how they can adapt to regional population decline and the manner in which industry is growing, make such decisions. This is a matter concerning the management of regional banks, and each individual bank will make its own decisions, and I think mergers are one way for them to move forward, but from our standpoint, we have no intention of saying this or that about them. Having said that, unlike in the 1940s and 1950s, when they were short of funds, banks now have a surplus of funds due to current economic conditions. The current problem is not a lack of money but a lack of demand. A lot of people completely fail to understand that, but what is lacking is demand. So the problem is a lack of private-sector demand. The money supply has been expanded and fiscal measures are also being taken, so if regional banks just sit there and wait until private-sector companies decide to make capital investments and come to them to borrow money, they will not survive. I don’t think it’s that kind of era. Some banks are being active and growing. You understand why when you look at the attitudes of their executives. The attitude at banks like that is extremely clear. They go to companies with proposals. They tell them that there are things like this in other prefectures, and suggest that the customer also do it. Banks whose sales teams inform customers about new things and make them aware of alternative methods are fully aware that they’re not in an era in which all they have to do is take deposits. There’s a gap between the banks that can do things like that and the banks that can’t. I think that’s a natural state of affairs, but for that reason, I hope that the merger of Higo and Kagoshima, and the other mergers that are happening now, will turn out to be success stories.