Press Conference by the Minister for Financial Services

(About the result of the special inspections and other measures.)

(Excerpt)

(17:07 to 17:23 on April 25 (Fri.), 2003)

Following the Program for Financial Revival, we conducted another round of special inspections in the context of promoting tighten assessment of bank assets. The special inspections last year resulted in reconsideration of borrower classification of a substantial number of debtors under review. Nonetheless, further 27 debtors were reclassified to lower categories in this round of special inspections. While the previous round of special inspections was conducted in a strict manner, the inspections this year, I believe, became even stricter. Also application of the discount cash flow type method resulted in a substantial increase in the rate of provisions for loan losses in respect of large debtors classified in the ''need special attention'' category.

On the other hand, I would like to make a point that the disposal of NPLs is making a steady progress pushed by the results of these rigorous inspections. The banks will duly record on their books the losses from such NPL disposition in respect of the debtors checked in the special inspections. I referred earlier to reclassification to lower categories, but there were also a substantial number of cases where borrowers were shifted upward. Such upgrading, I think, is a proof that progress is being made in corporate reconstruction.

Q.

Will such special inspections be repeated in the future?

A.

It would be ideal if the situation reaches the point where special inspections are no longer necessary. However, we cannot readily tell if its discontinuation at this stage is appropriate. Our objective is to put an end to the NPL problem in two years from now. To achieve it, we need the banks to move rigorously to adopt stricter asset assessment, reinforce their net worth, and improve corporate governance. To that end, we will proceed with our inspections and supervision.

Site Map

top of page