Press Conference by FSA Commissioner Takafumi Sato
March 23, 2009
[Opening Remarks by FSA Commissioner Sato]
I do not have any particular statement to make. Please ask me questions.
[Questions and Answers]
I would like to ask you about Japan Post Insurance. Japan Post Insurance has submitted a letter of request to the Ministry of Internal Affairs and Communications, the FSA (Financial Services Agency) and the Office for the Promotion of Privatization of Postal Services asking for a cabinet order revision that is necessary for the company to sell cancer insurance. While the company is asking to be allowed to start the sales within fiscal 2009, an industry group and other organizations in the United States are reportedly opposing this move on the ground that an equal footing has not been realized. The Minister of Internal Affairs and Communications has indicated that approval should be granted quickly. Could you tell me about the procedures to be taken with regard to this request and the FSA’s view on this matter?
On Thursday, March 19, Japan Post Insurance submitted a letter of request for a cabinet order revision concerning cancer insurance to the FSA, the Ministry of Internal Affairs and Communications and the Office for the Promotion of Privatization of Postal Services.
We will consider the request together with the Ministry of Internal Affairs and Communications and the Office for the Promotion of Privatization of Postal Services after seeking adequate explanations from the company about the specifics of the request. As the Postal Privatization Act stipulates that “circumstances that may affect competition with other life insurance companies and other circumstances, including the business condition of the postal insurance company,” should be taken into consideration when such a request is considered, so we will make judgment in accordance with the provision of this act by taking account of the establishment of necessary procedures and arrangements by the company, among other things.
Regarding the BOJ’s (Bank of Japan’s) monetary policy, last week, the central bank announced a plan to provide up to one trillion yen in subordinated loans as an unconventional monetary policy measure. Although this is intended to ensure a smooth exercise of the financial intermediary function, it is unusual for the BOJ to provide direct support to the strengthening of private banks’ capital bases. How do you view the BOJ’s decision?
On Tuesday, March 17, the BOJ announced a plan to start providing subordinated loans to financial institutions. I understand that this plan is aimed at ensuring a smooth exercise of the financial intermediary function and stabilizing the financial system.
As you know, corporate fund-raising conditions have become very severe as the Japanese economy continues to deteriorate rapidly, making it increasingly important that financial institutions properly and actively exercise their financial intermediary function. I believe that the BOJ’s announcement of the plan to provide funds with a capital-like nature in a situation like this is timely. This broadens the range of capital policy options for private financial institutions, as they will be able to take advantage of this measure soon, in addition to fund-raising from the market through self-help efforts and fund-raising based on the Act on Special Measures for Strengthening Financial Functions. I hope that individual financial institutions will strengthen their capital bases as necessary and properly and actively exercise their financial intermediary function by taking advantage of the expansion of the range of available options.
I hear that at a meeting Saturday (March 21) of a panel of experts at the Prime Minister’s residence, Minister Yosano said, in the presence of representatives from the banking industry, that he hopes the injection of public funds based on the Act on Special Measures for Strengthening Financial Functions and the BOJ’s subordinated loans will be used for the “main” part of the financial sector, which apparently refers to major banks and leading regional banks. The FSA has been expressing hopes that fund-raising will be implemented through a variety of measures, including one made through self-help efforts, will be used. Does Minister Yosano’s remark indicate that the situation has now changed and that the FSA hopes that policy priority will tilt more toward fund-raising based on the injection of public funds and subordinated loans provided by the BOJ?
As I already told you, the series of measures taken by us and the BOJ’s plan announced last week are aimed at enabling Japanese financial institutions to properly and actively perform their financial intermediary function by taking necessary risks and providing loans amid the severe corporate financing condition so that the negative impact on the real economy can be minimized. Individual financial institutions may need to strengthen their capital bases in some cases if there is some concern about their capital when they perform this function, so the public authorities are offering various support measures for fund-raising.
As you know, the Act on Special Measures for Strengthening Financial Functions is also intended to provide such support. As we have been saying, any particular type of financial institution, such as megabanks, is not excluded from this legal framework if the injection of funds conforms to this purpose. While I believe that individual financial institutions should decide capital policies based on their own judgment by taking account of their own financial conditions and the market environment, they are now expected to play a far larger role than before, so I would like to request them to actively consider using this useful public framework for fund-raising if they need to strengthen their capital bases in order to perform their expected role.
Regarding SFCG, which filed for application of the Civil Rehabilitation Act one month ago, media reports have revealed that the company simultaneously transferred the same loan claim to Incubator Bank of Japan and another bank. Could you tell us about the facts recognized by the FSA in relation to this matter and what would you say to the criticism that a licensed bank’s involvement in an incident like this is inappropriate?
I am aware of the media reports that you mentioned. Generally speaking, the FSA maintain a broad stance of protecting borrowers without knowledge and keep a close watch on problems if any.
I understand that at issue are SFCG’s loan claims. The Money Lending Control Act requires money lenders to ensure appropriate management of business operations, so it is necessary that loan claims are treated appropriately from this viewpoint. As the company in question is subject to prefectural supervision, we will deal with this matter strictly and appropriately in cooperation with prefectural supervisory authorities.
As for the criticism that the involvement of a bank, which operates under a license, in an incident like this is inappropriate, I would like to refrain from making specific comments. Under the Money Lending Control Act, a person to who has received a loan claim from a money lender is required to immediately provide the debtor with a document that makes clear the contents of the loan contract. In addition, under Article 467 of the Civil Code, in order to assert the transfer of the designated claim against the debtor, the person transferring the claim is required to notify the debtor, and the repayment made by the debtor before the notice is effective under the Civil Code. It is necessary to examine the specifics of the case that you mentioned in your question, including whether the case meets the requirement for the receiver of the loan claim to immediately notify the debtor or, if there was a delay, whether there is any rational reason for the delay. In any case, we will conduct strict and appropriate supervision based on laws and regulations from the viewpoint of the protection of borrowers, namely debtors, and in light of the provision of the Civil Code that I mentioned.
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