November 14, 2003 Results of the Follow-up of the Special Inspections

The Financial Services Agency (FSA) has conducted a follow-up of the special inspections for the banks' interim period ending September 2003. The results of these follow-up inspections are summarized below.

1. Outline of the Follow-up of the Special Inspections

(1)

Featu

re of Inspections: The follow-up inspections looked at the interim period ending September 2003, targeting the same debtors and using the same inspection method as in the special inspections for the fiscal year ending March 2003.

(2)

Banks

Inspected: 11 Major Banks (Sumitomo Mitsui Banking Corporation (SMBC), Sumitomo Trust and Banking, Chuo Mitsui Trust and Banking, Mizuho Bank, Mizuho Corporate Bank, Mizuho Trust and Banking, Bank of Tokyo-Mitsubishi, Mitsubishi Trust and Banking Corporation, UFJ Bank, UFJ Trust Bank, Resona Bank)

(3)

Perio

d of Inspections: Commenced on August 18, 2003, and completed with notification of inspection results to individual banks on November 7, 2003.

(4)

Metho

d of Examination: The inspections checked the borrower classification of each debtor at a respective main bank to obtain appropriate classification which reflects the latest business condition of the debtor on a real time basis. Coordinated works were carried out with the banks' external auditors.
The special team for examining reconstruction plans examined the borrowers' reconstruction plans in cooperation with the special inspection team. The results of the examination have been reflected in the classification of borrowers.

(Note)

The special team consists of members including an expert for corporate reconstruction specially hired from the private sector and a professor specializing in the field of Commercial Law, in addition to FSA inspectors, a number of which are certified lawyers, accountants, and real estate appraisers. The team was established in December 2002.

(5)

Total

number/amount of borrowers/credits: 161 borrowers, with 13.1 trillion yen of credits,
are identical to those inspected in the special inspections for the fiscal year ending March 2003.

(Note)

In the special inspections for the fiscal year ending March 2003, the FSA inspected the borrower classification of 167 large debtors (with total credit amounting to 14.4 trillion yen), whose stock prices, external ratings and other indicators had been experiencing significant changes. Out of these 167 borrowers, 6 borrowers had gone bankrupt or been removed from the B/S.

2. Results of the Follow-up Inspections

The migration of inspected debtors between different borrower classifications, and the provisional estimate of the amount of write-offs and provisions reflecting the borrower classifications after the inspections, are summarized below.

(1) Migration of debtors between classifications


(Note 1)	Figures for the four industries (construction, real estate, wholesale and retail, and other financial services) are indicated in brackets.
(Note 2)	''Those removed from the B/S'' stands for borrowers whose entire credits had been collected or sold off in the fiscal year ending March 2003.

(2) Losses from the disposal of NPLs (regarding borrowers inspected)


(Note)	Figures are aggregated from raw data presented by banks on a voluntary basis.

(3) Provisions for loan losses to borrowers categorized ''need special attention'' (regarding borrowers inspected)


(Note 1)	Figures are aggregated from raw data presented by banks on a voluntary basis.
(Note 2)	The rate of provisions is calculated as the rate of provisions to the uncovered portion of credits.