Press Conference by the Minister for Financial Services

(Excerpt)

January 7 , 2003

I would like to take this opportunity to announce my New Year resolutions.

This year, in which the Koizumi Cabinet will mark its second anniversary since its inception, I hope the accomplishments of structural reform could really be felt. My resolution is to make it a year in which one could really feel that structural reform is steadily underway. I am committed to the administration of the economy based on such a resolution.

In regard to the financial sector, I intend to accelerate the disposal of non-performing loans (NPLs) through the prompt and steady implementation of the Program for Financial Revival. In order to achieve this, I would like to strengthen the financial administration more than ever, by utilizing, for example, the Task Force established at the end of last year.

Since the end of 2002, new trends have emerged as exemplified by public announcements made by a number of banks to carry out new management reforms voluntarily, which I consider as a positive move. At the same time, however, when the banks work on materializing them in the future, I intend to observe them from three angles, in view of the details of their plans and to make sure that they will yield results.

Coincidentally, they all start with the letter ''S''. The first question is whether the plan is ''strategic'' or not. Is it strategic? A management plan needs to be clearly and strategically meaningful. If the plan for organizational reform or merger is solely aimed at getting the figures right, it cannot be appreciated. It is necessary to take a close look at the plan, as to whether it is truly strategic.

The second question is whether the plan is ''sound'' or not. Is it sound? It is extremely important to sustain a sound financial basis: the management plan must not end up chipping away precious funds. In that sense, we should pay attention to soundness as well. With respect to accounting, it is extremely important to strictly apply the existing accounting standards to protect investors and depositors in this context, and close attention must be paid to the performance of auditing firms in that sense. In regard to auditing firms' responsibilities, it is necessary to strictly inspect their continuity. We would like to pay attention to these areas as well.

The third question is whether the plan is ''sincere'' or not. Is it sincere? It would be unfair to exploit their superior position as lenders and impose pressure to underwrite the new issue of shares, or artificially raise the level of capital adequacy by underwriting the new issue of shares on a mutual basis. We must have a clear viewpoint to prevent such practices. Various plans that have been submitted by financial institutions when they accepted public funds constitute a promise, which should sincerely be executed, as a matter of course.