Press Conference by the Minister for Financial Services

(Excerpt)

December 2 , 2003

Today, the Cabinet held a meeting. In the meeting, I made remarks on the submission of the report with regard to the Financial System Management Council held on November 29.

I would like to read the report. ''This report is submitted to the Diet after the decision at this Cabinet meeting based on the Article 102.6 of the Deposit Insurance Law with regard to the contents of the determination on the necessity to take a measure for the Ashikaga Bank Ltd. in accordance with the Article 102.1 of the Law, when the Prime Minister made this determination. In the report, the contents of the determination on the necessity to take a measure for the bank based on the Article 102.1.(3) of the Law is set forth. With regard to this determination, taking it into account that it is inevitable to maintain the bank's financial operations in the region, this measure was taken in this case. Under the new management team selected hereafter, the bank is to undertake management reforms as a special public management bank whose 100 percent of shares are held by the Deposit Insurance Corporation. The Financial Services Agency will continue its commitment to making double assurance on the stability of the financial system further, in close cooperation with relevant governmental organizations and the Bank of Japan''.

In relation to this, the Chief Cabinet Secretary made the following statement at the ministerial meeting. ''In the statement by the Prime Minister announced after the meeting of the Financial System Management Council held on November 29, it was decided to establish an inter-agency liaison council as soon as possible, in order to ensure the stability of finance and economy of the region where the Ashikaga Bank is operating. Accordingly, we will hold a meeting of the inter-agency liaison council to address the commencement of the special public management of the Ashikaga Bank, in the afternoon of December 2. The cooperation of Ministers will be appreciated.'' A preparatory meeting was already held yesterday. Today, an official meeting of the inter-agency liaison council will be held in the afternoon.

Q.

Are there any differences in inspections between major banks and regional financial institutions, in terms of asset assessment, if any?

A.

Basically, there is no rationality that the asset assessment of regional banks should be loose while that of major banks should be strict. Both banks have depositors, and inspections must be strictly conducted uniformly for the purpose of protecting depositors. This has always been our stance.

However, when valuating loans to small and medium-sized enterprises (SMEs) from large banks and regional banks, some factors should be considered even though the standards of loan assessment to large enterprises and SMEs are the same. These points are clearly stated in the ''supplement to the Financial Inspection Manual: treatment of classifications regarding credit to small and medium-sized enterprises.'' I recognize that these points are considered as a matter of course.