Press Conference by Shizuka Kamei, Minister for Financial Services

(Excerpt)

(Tuesday, February 16, 2010, from 9:08 a.m. to 9:23 a.m.)

[Questions and Answers]

Q.

I would like to ask you about the SME Financing Facilitation Act (Act concerning Temporary Measures to Facilitate Financing for SMEs, etc.). According to the statistics announced by six major banks yesterday, they received a total of 20,000 requests for the modification of loan terms last December and they accepted around 4,000 of them. Could you comment on the current situation and what you think are challenges?

A.

I am pleased that financial institutions are conducting business with strong awareness of their social function, and I believe that they understand the intent of the SME Financing Facilitation Act and are responding very positively to it.

In that sense, I think that financial institutions' current stance has convinced borrowers that they do not have to worry that they will not be able to receive new loans if they apply for moratorium (for existing loans). As such worry has been significantly reduced, borrowers are actively consulting with banks, and I think that this situation is very good.

However, what is more important is creating a situation in which there is work to do (for the SMEs). Even if a moratorium on loan repayment is granted, it would not be a solution unless there is work to do — and that must be profitable work. Now is the time for our government to make efforts to create such a situation, by quickly enacting and implementing the budget, among other measures.

Q.

It seems major banks rejected only a few requests for moratorium on loan repayment. Although this may mean that (the SME Financing Facilitation Act) is functioning properly, don't you feel the “risk of going too far,” namely the risk that non-performing loans may increase (as a result of excessive enforcement of the act) now that the act has been put into force?

A.

Your newspaper, which always says discouraging things, should reflect on the folly of such a stance. There is nothing wrong with going too far in doing good things. There is no concern that this will create moral hazard or destabilize the financial system. I suppose you will understand that if you look into this matter carefully. If there is (negative) sentiment about this among your colleagues, please dispel it. You have nothing to worry about.

(End)