Press Conference by Yuji Yamamoto, Minister for Financial Services

(Excerpt)

March 6, 2007

Q.

Today, a media report stated that Citigroup, the biggest bank in the United States, would make Nikko Cordial Group a subsidiary by launching a takeover bid for the group. What does the Financial Services Agency (FSA) know about this news, which, if true, would mean one of Japan's three biggest securities companies is to be taken under the wing of the biggest bank in the United States? What kind of impact do you think this will have on Japan's securities market?

A.

Although I am aware of the news report, nothing has been decided or announced. As this is a matter concerning the management decisions of private-sector financial institutions, the FSA would like to refrain from making comments at the moment.

Regarding concern about the possibility that one of the three biggest securities companies may be taken under the wing of a foreign company or cede managerial control to a foreign company, I take the standpoint of former British Prime Minister Thatcher, who said that what she wanted to protect was not British companies but the British market. I hope that this will trigger a new movement in the securities industry and help to revitalize the market.

Q.

The Tokyo Stock Exchange (TSE) plans to decide whether or not to delist Nikko Cordial Group in the middle of this month at the earliest. What would you like to see the TSE to take into consideration and attach importance to in making this decision?

A.

I am aware of media reports regarding such a plan. However, as I have already stated, this is a matter to be decided by the stock exchange, and as such I would like to refrain from making comments. It is up to the TSE to make the right decision as to whether or not to delist Nikko Cordial, and the best I would hope for is that the TSE will fulfill its accountability in this regard.

Q.

Stock prices are continuing to drop around the world. What does the government believe is the reason for the stock price drop?

A.

There are a variety of factors. To cite the view of market people, probable factors include the shrinkage of risk money triggered by a drop in Chinese stocks, wariness about a slowdown of the U.S. economy, wariness about the rapid unwinding of the yen carry trade and the yen's uptrend.

However, if we look at conditions within the Japanese economy, the corporate sector remains in good shape and fundamentals are solid, and the global economy is continuing to grow steadily. If we take these things into consideration, our view that this (the stock weakness) represents a mere temporary correction phase remains unchanged.

(End)

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