Press Conference by the Commissioner

(Excerpt)

September 1 , 2003

Q.

At the end of last week, 15 banking groups have submitted their Business Improvement Plans, in response to the Business Improvement Administrative Order under the ''30% rule''. What is your impression of the Plans submitted so far, and how do you evaluate them?

Also, when are the business revitalization plans expected to be disclosed to the public?

A.

The submissions of Business Improvement Plans have been received on August 29. As we are still in the process of scrutinizing them, I would like to refrain from making any specific comments.

In any case, the Business Improvement Plans will be incorporated into the business revitalization plans after being fully scrutinized. Financial institutions will publicly disclose the revised version of their respective business revitalization plans. The Financial Services Agency (FSA) intends to publicly disclose a summarized version of their Plans at the same time.

Please understand that we cannot, at this stage, specify the timing in which the business revitalization plans will be publicly disclosed for the reason I mentioned.

Q.

At the end of last week, the Industrial Revitalization Corporation of Japan (IRCJ) decided the companies that will be subject to assistance in the first round. Some made comments that the decision, finally made after a series of delays, somewhat lacks punch from the standpoint of integrated revitalization of industrial and financial sectors, as small rural companies had been selected. What is your evaluation of the first round decision? Also, please explain how FSA can cooperate, or how it intends to cooperate, to make the IRCJ deal with big issues, worthy of the name of industrial revitalization, or integral revitalization.

A.

The IRCJ decided on providing assistance for the first time as just stated, and it is the fruit of serious efforts it had been making since the IRCJ's inauguration in May, so I would like to highly appreciate their endeavors. At the same time, we hope the IRCJ will make further efforts for the future. As I am not aware of the progress of the IRCJ's operation, I don't make any more comments on this matter. In any event, FSA intends to continue cooperating with the IRCJ in any possible way.

Q.

When you say ''cooperating with the IRCJ in any possible way'', what do you bear in mind in concrete terms?

A.

We already have had the meetings with the IRCJ to exchange opinions. As the results of our discussion at the meetings, FSA requests banks to utilize the IRCJ whenever we have opportunities to exchange opinions with any kinds of financial institutions. In response to the opinions exchanged between the Inspection Bureau and the IRCJ, we have given any technical advice in the chance of meetings between the Inspection Bureau and the IRCJ. We intend to make any efforts in encouraging banks to utilize the IRCJ further, if necessary.

Q.

In regard to requests for tax reform this year, do you have any plans to slightly change or add new ideas to the scheme for the ''three-piece'' package relating to deferred tax assets, which was rejected last year?

A.

The issue was incorporated into the Program for Financial Revival, after which it was subject to a series of discussions in the context of tax reform in fiscal 2003. The ruling parties also decided to continue further examination. Taking these developments into account, I would like to request the ''three-piece'' package again targeting the fiscal 2004 tax reform, based on our view that it is indispensable for the stabilization of the financial system. We intend to exert every possible effort to win their understanding over this matter, towards the fiscal 2004 tax reform. Various discussions are expected to take place in the future as part of these efforts, and we intend to thoroughly examine and seriously work out how explanations should be provided towards its realization, and how their understanding could be won, in consideration of such discussions.

Q.

Does it mean that various ideas on the scheme will be part of the discussions to be taken into consideration?

A.

As requested, discussions are likely to be varied. While we have made no specific assumptions, we intend to make our utmost efforts in consideration of, and in accordance with the discussions, to win their understanding.

Q.

Last week, the Ministry of Finance held a briefing session on the budget and the tax system, in which the officer in charge of the tax system repeatedly stated that use of public funds should squarely be discussed, instead of requesting special preferential tax treatment to the financial sector. In the context of taking action based on various discussions, is it an option to do so in connection with a new framework for capital injection using public funds?

A.

We intend to make efforts in discussions and studies in all aspects to stabilize the financial system, but as far as the ''three-piece'' package is concerned, our tax reform request is made with the aim to clear up various doubts cast on capital adequacy and reestablish confidence thereby. Based on the various studies we have conducted to date, we regard that the implementation of the ''three-piece'' tax package will be the most effective measure in that respect.