Press Conference by Shizuka Kamei, Minister for Financial Services

(Excerpt)

(Friday, February 19, 2010, from 8:39 a.m. to 8:52 a.m.)

[Questions and Answers]

Q.

Merger negotiations between Shinsei Bank and Aozora Bank have reportedly become deadlocked, and there are media reports that the negotiations may end in failure. Could you comment on this?

A.

Like marriage, a merger between banks would have no chance of success unless both sides are naturally satisfied. This is a matter to be decided by the banks involved, so the FSA (Financial Services Agency) should not make intervention. We are neither encouraging nor opposing (the merger).

Q.

Regarding the postal businesses, I understand that Senior Vice Minister Otsuka will meet with officials of the Office of the U.S. Trade Representative next week. Do you have any ideas as to what kind of relationship (Japan Post) should form with the U.S. or other foreign companies.

A.

We have already solicited opinions — although I would not say I did so “to a full extent” — from the presidents of the American Chamber of Commerce in Japan and the European Business Council in Japan. U.S. government officials and private-sector companies may feel free to make requests if they have any. Should President Obama has something to say to us, I would be willing to meet with him.

Although we cannot continue hearing opinions forever, we will seek various opinions, as this is an epoch-making reform. It would be no good for us to draft a law that would be reversed in only four years or so. We must carry out a reform that could stand the test of history. Therefore, I will hear opinions thoroughly.

Next week, I will have an opportunity to hear opinions from the editors of major media organizations. I will also hear opinions from “shinkin” banks and credit associations again next Monday, setting aside a relatively long time for this. This reform can have a strong impact on the financial industry. It would be undesirable if post offices alone prospered while “shinkin” banks, credit associations and small insurance agents struggled. There is no doubt that each of them is supporting local communities and the Japanese economy. It would be undesirable if the situation improved only for the postal businesses. I am doing my job from that perspective.

Q.

You have set aside a substantial amount of time, one hour, for a meeting with “shinkin” banks and credit associations and said you will have more in-depth discussions than before. What would you like to discuss?

A.

For one thing, I would like to discuss how (Japan Post) should cooperate with regional financial institutions such as “shinkin” banks and credit associations, and there is also the issue of “pay-off” (a scheme in which deposits are insured only up to a certain amount in the event of a bank failure), namely the issue of (whether or not to raise) the ceiling on the amount of the insured deposit. The “pay-off” issue raised controversy when I was the chairman of the Policy Research Council (of the Liberal Democratic Party). We will consider issues like this, too, from various angles, as the postal reform is related to wide range of financial issues in general. We will consider such issues from various angles.

Q.

As for the issue of the “pay-off”… For example, of course, it is now believed that there is little risk of bank failure in the case of Japan Post Bank. Do you think that for the sake of regional financial institutions which cater to retail customers, you should consider radical reforms like revising the “pay-off” ceiling amount or reviewing the “pay-off” scheme itself?

A.

I would like to hear their requests or opinions, including those on this issue, once more. At that time, speaking of my experiences (when I belonged to the LDP), this was a very difficult issue. This was controversial. In addition to this, there are various other issues. On the other hand, when a president of a second-tier regional bank visited me yesterday, he expressed strong hope to cooperate with the postal businesses. There are many people who have similar hopes, so that will be the key point (of my discussion with regional financial institutions).

Q.

Regarding the strong hope for cooperation expressed by the president of a second-tier regional bank, was it the hope to develop a business tie-up with Japan Post?

A.

That is correct.

Q.

Do you mean a business tie-up?

A.

Yes. That is what he said. In a sense, second-tier regional banks, as well as “shinkin” banks and credit associations, are struggling under current economic condition. Therefore, the key point will be how (Japan Post) should develop reciprocally beneficial cooperation with such financial institutions.

As I said, we must by all means prevent “shinkin” banks, credit associations and second-tier regional banks from getting into a serious situation.

(End)