Provisional translation

Press Conference by Kaoru Yosano, Minister of Finance and Minister for Financial Services and Economic and Fiscal Policy


June 2, 2009

[Opening Remarks by Minister Yosano]

As the cabinet meeting proceeded according to the predetermined agenda, I have nothing particular to report to you.

[Questions and Answers]


I would like to ask you about the bankruptcy of General Motors of the United States. The company has been temporarily nationalized for rehabilitation. Although some debts will be guaranteed, it remains unclear how subcontracting manufacturers that do not have any business base in the United States will be affected. What would you say to the U.S. government’s handling of this matter and what are your views on the impact on Japanese companies and rescue measures.


First, the Japanese government hopes that GM, more than 70% of whose shares are now owned by the government, will recover as a major U.S. company as soon as possible. The government has probably already guaranteed account receivables for subcontracting manufacturers in the United States, and I expect that the United States will probably take appropriate measures with regard to parts suppliers and other subcontractors of GM.

When I asked Minister (for economy, trade and industry) Nikai about three weeks ago what would happen to Japanese parts manufacturers supplying parts to GM if GM filed for Chapter 11 bankruptcy procedures, he replied that the amount of account receivables owed to them are not large relative to their company sizes and that although they would incur losses, they could cope with the situation on their own. Therefore, I think that although Japanese manufactures have been affected, the impact remains minor.


Stock prices are continuing to rebound today, as the bankruptcy of GM means that all bad news waiting to happen has come out. Stock prices (as measures by the Nikkei average) have now rebounded close to 10,000. Could you tell us how you view the stock market condition and what impact you expect stock price movements will have on the management of financial institutions?


Stock prices are said to be an indicator of what kind of state the economy will be in six months later, and a stock price rise like this is far more encouraging than a drop. As Japanese banks’ capital includes stocks, this will have a favorable impact on their capital adequacy ratios. However, we need to carefully watch whether this will lead to the exercise of the financial intermediary function. A stock price rise alone is unlikely to lead banks to provide loans generously.


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