Press Conference by the Commissioner

(Excerpt)

February 3 , 2003

Q.

Please tell us why an administrative order for business improvement was issued against Mizuho Holdings, Inc. the other day. Also, there are claims that the disposal of non-performing loans (NPLs) might be incompatible with the imposition of an obligation to increase loans to small- and medium-sized enterprises (SMEs), which are generally exposed to higher risks than large companies. What is your view on this matter?

A.

Let me first elaborate on the administrative order for business improvement against Mizuho Holdings. In response to the financial results for the first half of the year, we demanded a report under Article 24 of the Banking Law and scrutinized its content. As a result, we determined that effective measures had not been taken sufficiently to fulfill the goals, and therefore issued the administrative order for business improvement.

In regard to the disposal of NPLs and the loans to SMEs, as stated in the Program for Financial Revival, we are working on the disposal of NPLs through comprehensive policy measures based on stricter self-assessment, enhanced governance and increased capital, with the aim to achieve normalization in FY2004. Making efforts toward smooth financing for SMEs and others while exercising proper risk management is an important issue, so we are going to do them in parallel with each other as a matter of course. We do not think they are incompatible with each other in any particular way.

Q.

The administrative order for business improvement against Mizuho Holdings was issued midyear, as opposed to precedents in which an administrative order for business improvement was issued after checking the financial results for the full year on an ex post facto basis. What makes this case different from them?

A.

As the goal is an annual one, our basic policy is to look at the annual financial results. However, the financial results for the first half of the year revealed that the gap had been massive as well, so we demanded them to report on why this happened, scrutinized the content of the report thoroughly, and issued an administrative order for business improvement so as to make them fully work on SME financing promptly.

Q.

Most banks are presumed to have decreased loans to SMEs during the six-month period. Is it your judgment that banks other than Mizuho could make improvements or take effective measures in the future?

A.

We demanded reports from other banks as well, and subjected the content of their reports to scrutiny from various angles. As a result, we found that they had made concrete efforts in various aspects, unlike Mizuho: for example, they set goals for each branch in concrete terms. However, as the amount of loans is somewhat less than the goal midyear, we will have to follow up their status in the future, but nonetheless, we determined that there is no need to issue an administrative order for business improvement at this point of time.

Q.

Does it mean that you might consider issuing an order when you see the year-end financial results?

A.

Of course. However, I cannot make a comment on it now because it will have to be addressed at that time. All I can say at this point is that we will keep a close eye on their status in the days ahead.

Q.

What was the problem at Mizuho; the size of the amount or the measures?

A.

It was their stance on making efforts. We issued an administrative order for business improvement because, as stated in the publicized documents if I am not mistaken, their stance on making efforts was problematic, such as their failure to set goals for each branch.