Press Conference by the Minister for Financial Services

(Excerpt)

April 27 , 2005

Q.

At last, the Cabinet approved the bill for privatizing postal services. What are your views on this?

A.

The government and the ruling parties have been engaged in a series of discussions regarding the bill for privatizing postal services, intensely and earnestly, and their efforts have resulted in the Cabinet's approval of the bill.

The government worked on the institutional design based on the Basic Policies for privatizing postal services announced last September, action to be taken in the so-called four areas announced this February, and the bill for privatizing postal services announced in April. Our understanding is that the Cabinet's approval of the bill came about as a result of us having prepared the bill by taking into account the series of discussions we held with various quarters, led by the Postal Privatization Preparation Office.

The Financial Services Agency (FSA) will continue working towards passing the bill, in accordance with the policies of the government as a whole.

At the Cabinet meeting, the Prime Minister requested all Cabinet ministers to cooperate in passing the bill, due to be submitted to and deliberated at the Diet in the days ahead.

Q.

There is a view that the private sector might be ''crowded out''. How do you plan to run operations with this in mind?

A.

Expanding the scope of business for the postal savings bank and the postal life insurance company after privatization will basically be at the top management's discretion. The postal savings bank and the postal life insurance company are huge to begin with, so if they rapidly enter into the loans business by using funds collected on the back of the government's credibility, it might affect the conditions in which they compete with private financial institutions, their ''equal footing'' status, the financial and capital markets, and so on. It will therefore be important for the financial administration to take proper action in order to prevent such a situation that ''crowds out'' the private sector. Based on this perspective, their scope of business will be the same as public corporations in the initial transition phase, but our understanding is that their scope of business will be expanded step by step, subject to the opinions of the Privatization Committee and the approval of the Minister in charge. Certain expertise needs to be gained to expand into new businesses, so the postal savings bank and the insurance company are expected to become independent by gradually gaining such expertise. In any case, the FSA is committed to taking proper action to prevent any confusion in the financial and capital markets.