Press Conference by Kaoru Yosano, Minister of State for Economic and Fiscal Policy and Financial Services

(Excerpt)

May 23, 2006

Q.

Today, there were some reports in the press that the Financial Services Agency (FSA) will take administrative action against Sompo Japan, including the suspension of its operations on the grounds that it had offered special benefits. What kind of reports have you received so far?

A.

This matter has not been passed on to me yet. I cannot confirm it.

Q.

Various problems have been found in life insurance and non-life insurance companies since last year, such as the non-payment of fringe claims and misrepresentations in pamphlets. What are your views on the fact that incidents which could undermine confidence in the industry have been revealed one after the other?

A.

The FSA's basic administrative stance has been to take administrative action against any industry under its jurisdiction if undesirable acts are found in light of the facts, laws and regulations, no matter what company it is, regardless of its size, and we are committed to keeping this basic stance into the future.

Q.

Major banks have announced their financial results. They are announcing one after the other that they will fully pay back the public funds, on the back of their unprecedented and extremely good financial results. What are your thoughts on this?

A.

Of course, good financial results are better than bad ones, but the issue of public funds remains, and from our point of view, it is still not good enough because even if the financial results improved, the deposit interest rate remains at such low levels and banks are still not able to pay corporation tax.

Therefore, the major banks must properly fulfill their financial intermediary function, which is the primary objective of the financial sector. Also, they should fulfill their financial mission to properly distribute resources in the Japanese economy by taking risks based on their own judgment.

Q.

In relation to banks' financial results, reversal of bad debt reserves was huge at Mitsubishi UFJ Financial Group and other banks, and there are claims that their provisioning might have been excessive. What is your opinion on this?

A.

As provisioning was done in accordance with the standards at the time, I think no provisioning was done with the knowledge that it would be excessive from the start.

(End)