Press Conference by the Commissioner

(Excerpt)

4 February, 2002

Q.

As the stock prices still continue to remain low today, it has been pointed out in the marketplace that ''this might be a reflection of the stagnant status of the structural reform due to future uncertainty concerning the non-performing loan (NPL) problem''. With these circumstances in mind, could you give us your perspective on whether or not the objective to solve the NPL problem in the coming 2 to 3 years can be reached, and your thoughts on the present trend of low stock prices?

A.

It is true that the downward move in stock prices is extremely sharp, and we are watching it vigilantly day after day. However, in terms of the structural reform, there is a variety of press coverage every day, if not under big headlines, about corporate reconstruction activities, including through court procedures, so we do not recognize the idea that the structural reform is being stagnated; it is rapidly progressing. However, I do think that it's necessary to push the reform further and further on and that what the Prime Minister expressed in today's policy speech is exactly relevant.

As for the question concerning the prospect of achieving the goal to solve the NPL problem, I believe that, as was mentioned in the Prime Minister's policy speech today, the NPL problem must be solved by FY2004.

Q.

I see that some of the stock prices of the so-called four mega banks have declined significantly. Could you tell us what you think of this when comparing it to their actual state as the Financial Services Agency grasps it?

A.

The press is reporting that market participants consider that these stocks are being sold because of the lagging progress in cleaning up NPLs or anxiety about credit risks. Taking this as a precondition in answering your question, our understanding is that, when it comes to cleaning up NPLs, the major banks are adequately prepared because they have secured the funds amounting to 6.4 trillion yen to deal with NPLs and the banks themselves should have the most thorough knowledge of the business conditions of their debtors.

Based on such understanding, I suspect that bank stocks are not assessed fairly when you take their current conditions into account. However, as a stock price is something that is formed by a variety of factors, I take the stance that, as I so claim from time to time, authorities should best avoid commenting in detail about stock prices.