Press Conference by Shoichi Nakagawa, Minister of Finance and Minister for Financial Services
January 27, 2009
[Opening Remarks by Minister Nakagawa]
While I did not have anything particular to report at today’s cabinet meeting, a cabinet decision was made on the contents of the Prime Minister’s policy speech and my fiscal policy speech. In addition, it was decided that JBIC (Japan Bank for International Cooperation) should provide emergency support to Japanese companies operating abroad. This loan program does not represent an enhancement of competitiveness as interpreted under WTO rules but rather it is aimed at supporting struggling companies. Although JBIC’s loans should basically be provided to companies operating in developing countries, some companies in automobile-related sectors are very large companies, so it was decided that JBIC should provide emergency support to such companies, including those operating in developed countries. We are scheduled to make a decision on the relevant notice based on a cabinet order today.
[Questions and Answers]
In relation to financial affairs, I would like to ask you about the current situation of regional banks. I understand that so far, two banks have expressed their intentions to apply for capital injection under the Act on Special Measures for Strengthening Financial Functions. In addition, Kagawa Bank and Tokushima Bank announced their business integration yesterday. What is your recognition of the environment surrounding regional banks and their management conditions?
Before I talk about the merger, I would like to tell you about my view about news that umbrella organizations for “shinkin” banks and credit associations are considering applying for governmental capital injection. As I have been saying, liquidity problems faced by financial institutions around the world are affecting the real economy considerably. Therefore, while I would not tell them whether or not to do this, in light of the purpose of this act, it would be very good if they decided to. I would welcome it. As I told you earlier, I could not say whether or not this should be done, nor have I received any formal report about this. However, generally speaking, I think this is also good from the viewpoint of the provision of liquidity to small and medium-size enterprises (SMEs).
As for the merger plan of the banks in the Shikoku region that you mentioned, I do not know anything more than has been reported by the mass media. Previously, I think that one of the major objectives of the Act on Special Measures for Strengthening Financial Functions was to promote mergers. However, this time, rather than promoting mergers, it is intended to give banks the additional capacity and sufficient financial strength to provide loans to SMEs and local economies. So, while promoting merger is not a major direct objective, we will keep a close watch on this because banks’ financial strength may be enhanced by a merger, although I do not know how this merger plan will play out.
Regarding the news that umbrella organizations for financial institutions are considering applying for public funds that you mentioned, does this concern organizations like Shinkin Central Bank and Shinkumi Federation Bank?
I have been speaking on the premise that there have been media reports to that effect.
I think that some of the umbrella organizations have indicated that they will not for the moment apply for the use of the revised Act on Special Measures for Strengthening Financial Functions, as they can increase their capital on their own. What is your thinking in this regard?
Which organizations are those?
I am talking about organizations such as Shinkin Central Bank and Shinkumi Federation Bank.
Have they denied the media reports?
They have indicated that for the moment they have no intention to use this Act immediately.
I do not know anything more than what has been reported by the mass media, and I think that making such a judgment would be one option for them. We would like to refrain from saying whether or not they should do this.
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