Press Conference by the Minister for Financial Services

(Excerpt)

October 24 , 2003

Q.

In the revised earning forecasts of the Resona Bank, the enhancement of provisions is a key element. There are concerns as to whether provisions of other banks are sufficient. What is your view on the current provisioning status of major banks?

A.

In order to constructively discuss adjustments of balance sheets in Japan, we need to stop simply discussing the action of major banks in comparison to that of Resona.

As to the question whether the provisions are sufficient or not, banks have obviously met minimum requirements which are clarified in guidelines and other documents. If they do not meet requirements, it is to be revealed through our inspections. It depends on a management decision how to overcome their problems. It is one of the management targets to make their financial position more solid by strengthening provisioning. However, it is merely one of the management targets, and it cannot be the solution to everything, to make their financial position more solid. It is possible to take other management strategies such as increasing and expanding money lending, instead of strongly enhancing provisions. The choice depends on the time and situation, such as the provisioning of each business entity and economic circumstances. That must be a management decision.