Press Conference by Yuji Yamamoto, Minister for Financial Services

(Excerpt)

February 27, 2007

Q.

Today, Nikko Cordial Securities will issue a correction report. In light of the series of developments concerning the Nikko issue, what are your views on this issue and how do the authorities intend to deal with it?

A.

As you pointed out, I understand that the company will issue a correction report. This is a matter concerning an individual company, and the correction report has not yet been submitted. Also, I understand there has been no announcement thus far about specifically how those responsible are to be held accountable, and so I would like to refrain from making comments. Generally speaking, upon the detection of any legal problem with regard to financial statements submitted, the Financial Services Agency (FSA) is ready to deal with them appropriately based on laws and ordinances.

Q.

According to media reports, there is a plan to seek damages from former managers. If there is in fact such a plan, what do you think of it in terms of a means for holding those responsible accountable?

A.

From the viewpoint of fulfilling its accountability to shareholders, Nikko Cordial Group set up a committee of outside experts on February 1 to consider ways to hold those responsible accountable. I understand that this committee is conducting deliberations on the scope of the responsibility of persons involved in this case and on other issues. This is a matter concerning the managerial responsibility of Nikko Cordial as an individual company, and I think it is up to this committee to consider whether to seek damages from former managers as a way of holding those responsible accountable based on its understanding of the issue of management responsibility. In any case, I hope that the parties concerned will make efforts to implement appropriate disclosure concerning corporate financial information in order to prevent the reoccurrence of cases like this.

Q.

I think the focus of attention will be on whether the Tokyo Stock Exchange (TSE) will maintain its listing of Nikko Cordial, and it has been argued that if the company is delisted, it may harm the interests of present shareholders rather than those of former managers or people who engaged in illegal activities. From the viewpoint of investor protection, what is your view of this argument?

A.

Generally speaking, it may be inevitable for listed companies to consistently face the risk that wrongdoing by managers can lead to this kind of situation. Therefore, we strongly hope that consideration will be given to the protection of ordinary shareholders and ordinary investors. However, listing, delisting or re-listing standards are matters for consideration exclusively by the TSE, and so I think we should avoid sending messages that could provide a predetermined idea.

Q.

Concerning which entity should take over Ashikaga Bank, I understand that lawmakers from constituencies in Tochigi Prefecture handed you a letter of request yesterday and many lawmakers expressed concern about foreign capital in particular. What are your views on this matter?

A.

At a hearing of the working group, Governor Fukuda also requested as a matter of importance that the takeover entity be one that aims for long-term, stable management. This appears to reflect a concern about foreign capital. However, after hearing the explanations in full, I understand that what they are rejecting is not foreign capital per se. Rather, they are worried about the possibility of a takeover by an entity that would seek only short-term investment returns. Namely, as I understand it, they are worried about a possible impact on the functions of local finance, the job security of Ashikaga Bank employees, regional stability and the local economy. Aside from such issues, there should be no reason for rejecting foreign capital, and what they are requesting, it seems to me, is that this matter be resolved successfully based on a solid plan and with deep insight. We have repeatedly made full explanations to local communities about the principle of equal treatment for domestic and foreign entities, and so their request is a message to the FSA that the matter be handled in a way wherein negative impacts on- or consequences to the local economy are avoided. This is my understanding.

(End)

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