Press Conference by Taro Aso, Deputy Prime Minister, Minister of Finance, and Minister of State for Financial Services
(Friday, March 31, 2017, 9:11 am to 9:28 am)
[Questions and answers:]
I would like to ask about Japan Post Bank’s entry to unsecured loans for individuals. Japan Post Bank is expected to apply today to the Financial Services Agency and the Ministry of Internal Affairs and Communications to go into this new business. While certain considerations have been given to constraining overuse, such as capping such loans to a maximum of 500,000 yen, these loans are essentially the same as credit card loans in that there are no restrictions on the use of the money and that the loans are readily available. Given that the Minister yourself suggested the other day at the Diet that the bank card loans are increasing sharply, what are your views on Japan Post Bank starting this new business?
We are aware of the news reports, but Japan Post Bank has essentially become a private-sector bank. Since this matter concerns the business decisions of a particular company, we cannot comment on it. Although it is said that money from the Bank of Japan is put into banks as current deposits, it only enters the money supply when the money flows from the bank into the market, into the private sector, so that money supply is not increasing now. They cannot provide financing or, to put it oppositely, private-sector banks are not lending out money. It is okay if they do not have the funds to lend out money. However they do have money. Despite having money, they are not lending it out. There may be a variety of reasons for this, among them not wanting to assume the risks entailed with some borrowers. And I wonder if Japan Post Bank does indeed have the ability to screen loan applications needed to go into this business. Although regional banks are all doing this and it is not increasing at all, Japan Post Bank will be a new entrant into the field and will be assuming considerable risks if it does not have sufficient screening capabilities. This is a difficult sector without screening capabilities, and the post office should think of some entirely different means of investment. This has been said by many knowledgeable observers, so some thought needs to be given to that. We have not heard any details about their specific approaches to this issue, including the idea of card loans, and we are not in a position to comment about the consequences of the decisions of a private company.
With regard to Toshiba, its nuclear power subsidiary Westinghouse filed for Chapter 11 protection on the 29th (Japan time). You noted in an earlier press conference that a filing would need to be made by the end of the month, so how do you take this news?
It seems that Toshiba, to put it simply, is compensating for the losses incurred by Westinghouse as a company and, if that is so, we will not know what losses Toshiba will incur in providing this compensation until there is a final reckoning of Westinghouse’s losses. Suitable steps must be taken if this matter is to be resolved and, while the company has filed for bankruptcy, it remains for Toshiba as an individual firm to make its own business decisions, so I will refrain from commenting any further than that. However, if Toshiba as a parent company does not properly restructure its operations, it will face concerns about the continuity of its other companies and their management even if it cuts Westinghouse loose. Since this issue involves dealings between private companies, I cannot say anything about how they will move forward but, although the company will not go bankrupt immediately, the only clear thing is that Toshiba must take steps to enable a management turnaround over the long term. Those of us observing from the outside do not have a good view of who is the president and who makes the final decision. If a company has fallen into a bad state of affairs and there is no one to hand down a final decision – if the company does not have people able to make business assessments and determine what needs to be done – it will find it difficult to handle such emergencies. It is all fine and well for the management team to collectively discuss matters before reaching a decision during ordinary times, but it seems that this approach no longer works in the midst of an emergency.
Do you see Toshiba’s governance as functioning properly at the moment?
That I do not know. I am not fully acquainted with the company’s workings, so I do not rightly know.
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