(Provisional translation)
August 21, 1998
Prime Minister's Office
The Government of Japan
Statement by the Prime Minister
-The merger of the Sumitomo Trust and Banking Company, Ltd. and the Long-Term
Credit Bank of Japan, Ltd.-
1. Today, I received a following report from the Commissioner of the Financial
Supervisory Agency with respect to the merger of the Sumitomo Trust and Banking
Company, Ltd. ("the Sumitomo Trust") and the Long-Term Credit Bank of Japan, Ltd.
("the LTCB"）:
・ The LTCB made public today, in view of the prospective merger with the
Sumitomo Trust, comprehensive measures for its rationalization and sound
management, including substantial disposal of bad loans and thorough
restructuring;
・ The Sumitomo Trust will continue constructive negotiations with the LTCB
towards the merger.
2. As I have previously mentioned, I am firmly determined never to allow
financial crisis to happen; and thus I am prepared to make the utmost efforts to
stabilize the Japanese financial system and to restore market confidence in it at
home and abroad. In this sense, I highly welcome the agreement that the two banks
will move forward their merger plan in a more concrete manner, since the agreement
will be surely conducive to the stabilization of the Japanese financial system.
3. Accordingly, the Japanese Government intends to take every possible measure
to support the merger plan from the viewpoint of this contributing to the maintenance
of orderly financial system as well as the economic stability in Japan.
(provisional translation)
August 21, 1998
Ministry of Finance, Japan
Statement by the Minister of Finance
- On the merger between the Sumitomo Trust and Banking Company, Ltd. and the
Long-Term Credit Bank of Japan, Ltd. -
1. Today, the Ministry of Finance ("the Ministry") was informed by the Financial
Supervisory Agency as follows:
1) The Long-Term Credit Bank of Japan, Ltd. ("LTCB"), in view of the prospective
merger, will implement comprehensive measures for its rationalization and sound
management including substantial disposal of non-performing loans and restructuring.
2) The Sumitomo Trust and Banking Company, Ltd. will continue constructive
negotiations towards the merger with the LTCB.
3) The LTCB will apply for a capital injection based on the Emergency Measures Act
for Financial Stabilization, considering that it will be temporarily under-capitalized
as a result of the substantial disposal of non-performing loans.
2. As was stated in my statement issued last June 26, we think the merger initiative
of the two banks will contribute to the stability of the financial system. We,
therefore, highly welcome the agreement to continue constructive negotiations
towards their merger. .
3. The Ministry is prepared to consider appropriately the capital injection into
the LTCB upon its application, having in mind that the merger of the two banks
contributes to the stability of our financial system and that if the situation
of the capital base of the LTCB does not improve, the confidence in orderly function
of the financial system as a whole could be significantly deteriorated both at
home and abroad and also the stabilization of the credit system and smooth operation
of the national economy could be seriously damaged.
4. The Ministry is prepared to continue to make every effort to ensure the stability
of the financial system while maintaining close communications with the Financial
Supervisory Agency and the Bank of Japan.
(Provisional translation)
August 21, 1998
Financial Supervisory Agency
The Government of Japan
Statement by the Commissioner
-The merger of the Sumitomo Trust and Banking Company, Ltd. and the Long-Term
Credit Bank of Japan, Ltd.-
1. The Sumitomo Trust and Banking Company, Ltd. ("the Sumitomo Trust") and
the Long-Term Credit Bank of Japan, Ltd. ("the LTCB") announced on June 26 this
year the merger plan and have since striven to realize the plan. The Financial
Supervisory Agency ("the FSA") was informed today from the two banks as follows:
・ The LTCB made public today, in view of the prospective merger with the
Sumitomo Trust, comprehensive measures for its rationalization and sound
management, including substantial disposal of bad loans and thorough
restructuring;
・ The Sumitomo Trust will continue constructive negotiations with the LTCB
towards the merger.
2. The Agency considers the merger plan of the two banks as aiming at addressing
themselves to the coming reorganization of the financial industry, and as conducive
to the stabilization of the Japanese financial system. Thus the Agency esteems the
LTCB's measures as a great step forward to the shaping up of the merger plan.
3. Moreover, the LTCB－considering that it will be temporarily under-capitalized
as a result of the above-mentioned substantial disposal of bad loans to be carried
out this September－also reported to the Agency the following:
・ The LTCB will apply to the Examination Board of Financial Crisis Management
for a capital injection based on the Emergency Measures Act for Financial
Stabilization. This serves the LTCB's purpose to restore market confidence
in it through strengthening its financial base;
(Note) The Examination Board of Financial Crisis Management consists of
seven members: three experts from the private sector, the Commissioner
of the Agency, the Minister of Finance, the Governor of the Bank of
Japan and the Governor of the Deposit Insurance Corporation.
・ In line with this, the LTCB will take its managerial responsibilities
including the prompt resignation of Mr. Masuzawa and Mr. Ohnogi, its
chairman and president, respectively.
4. Regarding the re-capitalization of the LTCB based on the Emergency Measures
Act for Financial Stabilization, I will examine the LTCB's application in an
appropriate manner when this is made, taking into account that the merger of the
two banks will be instrumental in the stabilization of the Japanese financial
system. Similarly, I will keep in mind that, without the improvement of LTCB's
asset quality, market confidence in the financial functions fulfilled by the
Japanese banks as a whole could significantly go down at home and abroad. This
may cause serious damage to the maintenance of orderly financial system and the
economic stability in Japan.
5. The Agency will continue to take all possible measures, in close cooperation
with the Ministry of Finance and the Bank of Japan, for the stabilization of the
financial system.
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