Press Conference by Yuji Yamamoto, Minister for Financial Services

(Excerpt)

June 26, 2007

[Minister's Statement]

Good morning. I would like to report on the Cabinet meeting. The Minister for Gender Equality and Social Affairs reported on the 2007 Report on National Lifestyle. The Minister for Foreign Affairs reported on the granting of emergency grant aid to the refugees in Chad and the Central African Republic affected by the Darfur dispute. The Minister of the Environment reported on his trip to Singapore. That concludes my remarks.

[Questions and Answers]

Q.

Regarding the proposed Regional Power Revitalization Corporation, Minister Ota has reportedly indicated a plan to launch a study group. Would you share with us your thoughts on the Financial Services Agency's involvement in the plan?

A.

Large Japanese banks have completed their disposal of nonperforming loans. As the problem surrounding the disposal of nonperforming loans and systemic risks have subsided, these banks are now about to take off. The situation surrounding the large banks could be taken as indicating that priority has been given to major cities. In particular, second-tier regional banks, shinkin bank credit associations and shinkumi credit cooperatives, as well as ordinary regional banks, have demonstrated slower progress than large banks in their disposal of nonperforming loans. This is because these regional financial institutions have put forth a moderate performance in their disposal of nonperforming loans through relationship banking. At a time when gaps between major cities and other regions are receiving considerable emphasis, however, the FSA is ready to fully cooperate with other government agencies in establishing a framework for regional power revitalization. The study group that Minister Ota has launched includes former Iwate Prefecture Governor Masuda and former officials of the Industrial Revitalization Corporation of Japan. The IRCJ model has been credited in bringing about good results in regional economies through effective nationally-applicable methods for facilitating Ashikaga Bank's disposal of nonperforming loans and industrial companies' turnarounds. In particular, the Tochigi Prefecture model covered has 80 business turnaround plans, against a national average of 20 to 30 plans per prefecture. Governor Fukuda has praised these turnaround plans for limiting job losses both before and after business failures and maintaining overall employment levels. In response to such effects, we are willing to utilize know-how based on our experience to make great contributions in regions, including those where no economic takeoff is expected. Specifically, the FSA is ready to participate in the study group as observer. Regional financial institutions may have to make key proposals for the revitalization of regional economies. The proposed Regional Power Revitalization Corporation may fail working its efforts without regional banks' cooperation. Therefore, the FSA plans to promote matching or harmonization between the proposed corporations and regional banks. Based on this plan, we are now monitoring relevant developments.

(End)

Site Map

top of page