Press Conference by the Minister for Financial Services

(Excerpt)

March 12 , 2004

Q.

Yesterday, the Shoko Chukin Bank announced its plan to reconstruct small and medium-sized enterprises (SMEs) through debt-to-debt swap. I believe the Bank utilized the measure proposed in The Supplement to the Financial Inspection Manual: treatment of classifications regarding credits to small and medium-sized enterprises. What is your view on the reconstruction of SMEs in the future?

A.

I am aware that the Shoko Chukin Bank will collaborate with the SME Turnaround Support Committee in Tokyo to tackle the first case of supporting the reconstruction of SMEs receiving assistance in preparing reconstruction plans, through debt-to-debt swap. Fundamentally, funds loaned to companies as long-term operating funds have capital properties. Accordingly, debt-to-debt swap handled properly is to be treated as capital, under the recently revised Manual, that is a major step that we have taken with great confidence. It is extremely encouraging for us to see the Shoko Chukin Bank promptly making efforts in this direction. Actions and efforts focusing on the actual conditions of SME financing shall be taken, and we expect that such efforts and actions will help facilitate financing.

The idea of debt-to-debt swap is advocated in a study group which was established in line with the ''Action Program concerning enhancement of Relationship Banking Functions''. I believe it is important to continue implementing the Program in a steady and concrete manner.