Press Conference by Yuji Yamamoto, Minister for Financial Services

(Excerpt)

April 6, 2007

Q.

Although the Financial Services Agency took severe administrative action against consumer loan firm Sanwa Finance Inc. this week, the Sanwa Finance management has yet to admit or specify its responsibilities for the practices subjected to the penalties. It has sent few messages to the market. What are your views about Sanwa Finance's future compliance with law and corporate governance?

A.

We have found that multiple branches of Sanwa Finance registered at the Kanto Local Finance Bureau violated the Money-Lending Business Control and Regulation Law with regard to loan collection practices and disclosure of business records. On April 4, the FSA thus ordered all of the Sanwa Finance outlets to suspend operations for 43 days. Outlets that implemented illegal practices were ordered to halt operations for 45 to 60 days. In this case, the head office adopted internal rules that promote or call for illegal practices. We have realized that the whole of Sanwa Finance, including the management team, lacks consciousness with and efforts for compliance with law and has serious problems regarding the business management and operations systems. This is very regrettable.

The FSA would like to encourage the company to fully secure compliance with law and regulations throughout its organization and restructure business management and operation systems. We would also like to conduct appropriate supervision to ensure the firm's steady implementation of practice improvement efforts.

It may be needless to state the Sanwa Finance management team's responsibilities for the lack of law compliance or corporate governance. We hope that the firm would create a new setup to positively improve practices.

Q.

You said it is needless to state the responsibilities of the management team. Do you mean that it is needless to state that the management team should take due actions?

A.

Sanwa Finance's head office has internal rules to promote or call for illegal practices. This means that we cannot request the company to comply with law and regulations. Corporate governance means that managers are sound enough to control the organization. We believe that preconditions have not been met for law compliance or corporate governance at Sanwa Finance. We believe that, if the management team chooses to work out new measures for prevention of illegal practices without being replaced, it should explain how to specify its responsibilities in order to provide society with a reason for remaining in place.

(End)