Press Conference by the Commissioner

(Excerpt)

18 March, 2002

Q.

Regarding disclosure of the results from special inspections, the Minister for Financial Services said the timing of disclosure was targeted at mid April. To what extent have you completed specific examination items?

A.

There are several cases with which discussion among inspector, banks and accountants has not been completed yet, and I think it is very likely that the discussion on the adequacy of classification of large borrowers will continue until the very end of March.

If so, I hope we will disclose the results as early as possible in April.

Q.

The anti-deflation measures also request the banks to disclose the financial statement taken of the special inspection. What do you think about its timing?

A.

Currently, we are making a request for banks to publish.

The ''pay-off'' system will restart and Japanese people have a strong interest in the degree of soundness of each financial institution, reflecting the results of general inspections, special inspections, or follow-up inspections. We insist and make a request to the banks that they should be disclosed as soon as possible, however, a volume of operational work is concerned and we cannot make any prediction at this stage.

Q.

Concerning the structural establishment in preparation for the end of the ''pay-off'' system, has it also been completed for the major banks that are undergoing special inspections? Some ministers of other ministries and agencies mention that the re-injection of public funds may be implemented depending on the results of special inspections. How do we comprehend this?

A.

The average capital ratio of major banks as of the March term of last year was 11.7%. Since then, each bank has prepared a considerable amount of reserve funds for the disposal of non-performing loans (NPLs) based on special inspections, etc., and last November, it was announced that the total amount of reserve funds would be 6.4 trillion yen.

Taking into account this and factors related to the stock price, the Financial Services Agency has simulated various scenarios. As mentioned in the past, even if a substantial amount of NPLs are disposed, I think, at least, that the capital ratio of any of the banks will not become an excessively low level. This can also be said at present, and needless to say, this can be said for major banks as well.