Press Conference by Shizuka Kamei, Minister for Financial Services

(Excerpt)

(Tuesday, March 23, 2010, from 9:05 a.m. to 9:28 a.m.)

Q.

You have said that in line with the reform of Japan Post, the FSA (Financial Services Agency) will review how small and medium-size private-sector financial institutions should be supervised and inspected. Are you considering any specific measures to reduce their burden?

A.

The other day, I instructed FSA staff to conduct a study on such a review. One issue is whether the review should cover second-tier regional banks or should be limited to smaller institutions like "shinkin" banks and credit cooperatives. That should be considered in light of the actual status of inspection. The FSA inspectors rely on detailed data and documents that are not necessarily essential for the examination of the actual situation of the financial sector, although FSA staff say they are not demanding the submission of such data or documents. I have argued that inspectors should acquire the capability to make judgments concerning financial institutions without relying on documents and numerical data and that an inspection conducted by inspectors without such capability is not an inspection in its true sense. Therefore, the approach of relying too much on submitted documents and data should be changed. That is my argument. From the standpoint of financial institutions, FSA inspection imposes a considerable burden. To put it simply, they tremble with fear as they prepare for the inspection.

When I suggested to some financial institutions that they should actively provide loan before I became Minister for Financial Services, they used to tell me that they were afraid of the FSA and inspectors. Although I know such fear is used as an excuse for denying a loan in many cases, it is important to limit the burden imposed by inspection to a necessary minimum. What is important is to urge financial institutions to discipline themselves without imposing an excessive burden. Though extending loans in an appropriate manner and thereby fulfilling their social function are elements of improvement of a financial institution's financial condition, not much emphasis was placed on those points previously. Therefore, I am placing emphasis on those points.

Q.

I understand that you have said that in relation to the reform of Japan Post, the FSA will review how inspection should be conducted out of consideration of the impact by the reform on small and medium-size financial institutions. Am I correct in understanding that any special consideration will not be given for such financial institutions in any other way?

A.

What do you mean?

Q.

Am I correct in understanding that consideration will be given to the impact on the business of small and medium-size financial institutions only through the review of the inspection?

A.

I expect that following the reform of the postal businesses, Japan Post's fresh start will have a variety of effects. There will be both positive and negative effects. Whether the effects on each financial institution prove to be positive or negative will depend on how it responds to the reform. So, we cannot necessarily say that the effects will categorically be positive or negative.

(End)