Press Conference by Shizuka Kamei, Minister for Financial Services

(Excerpt)

(Friday, April 2, 2010, from 8:49 a.m. to 9:19 a.m.)

Q.

In a TV program yesterday afternoon, Minister for Internal Affairs and Communications Kazuhiro Haraguchi stated that financial institutions' burden of premiums under the deposit insurance system is considerable, amounting to approximately 640 billion yen per year. On the grounds that there are further concerns arising owing to the upcoming revision of the postal business, he also stated that it may be fair to review the level of the insurance premiums as well. What are your views on his comments?

A.

Our policy for this year is to maintain insurance premiums at the same level. I have stated, especially to representatives of small- and medium-sized financial institutions, that if there are any shortcomings such as raising concerns about these institutions' creditworthiness among depositors, we may, for example, consider changing (raising) the “pay-off” ceiling amount at 10 million yen, in the sense that it would enhance their creditworthiness relative to megabanks and Japan Post. If such issues as the rate of insurance premiums you just mentioned are tough, it would be appropriate for us to look into them. I have made suggestions along these lines, but so far I have not received any feedback from the finance industry requesting that we should look into those issues. No such requests have been made to me even by the Japanese Bankers Association. Even if I make suggestions, their response is “thanks, but no thanks”. That is the reality.

(Having said that,) The Financial Services Agency naturally would have to consider the points Mr. Haraguchi raised, while taking the financial institutions' financial position and other various factors into consideration. I am taking a flexible approach to this.

Q.

I have an extra question to ask in relation to this. Does it mean you may lower the rate of insurance premiums if the “payoff” ceiling amount is raised?

A.

Not only that, but also, even if the “payoff” ceiling amount remains unchanged, depending on the circumstances, and judging from the current situation… At the moment, the effective rate of insurance premiums is 0.084%. For the time being, we will apply this rate, but if we are asked by the finance industry to review this, we will be willing to do so. However, as I have repeatedly said, it would have been natural if financial institutions had requested that the burden of insurance premiums be lowered on the grounds of the industry's financial positions and other such factors before I intrusively offered to reduce their burden. The problem is that no such proposals have ever been made to me. Instead they have all but expressed their outrage and opposition against raising the limit of Japan Post Bank deposit savings. This is what is going on. It appears that both Mr. Haraguchi and I have been making unsolicited suggestions, judging from the current situation.

Q.

In relation to what you just mentioned, is the idea to set to raise the “payoff” ceiling amount to 20 million yen-which would eventually be the same as the planned new ceiling on the postal savings amount of Japan Post Bank -and reduce the rate of insurance premiums applicable only to small- and medium-sized financial institutions, or is it going to encompass all financial institutions?

A.

Haven't you been listening to what I said? I just explained this. I have received no requests whatsoever along those lines. If they are telling us that we need not lower insurance premiums, they have sufficient reserves, and we need not raise the ceiling of the “payoff”, it would be absurd for us to force it on to them.

Q.

Many members of the general public seem to think that lifting the ceiling on the postal savings amount of Japan Post Bank would translate into raising the “payoff” ceiling amount for such postal savings to 20 million yen...

A.

Only your company thinks so.

Q.

A policy meeting was held earlier today regarding the expected full enforcement of the amended Money Lending Act. Are you still in favor of the approach, to put the amended Act into force in its entirety on June 18?

A.

My approach, or position, has been to enforce the Act itself in full. Given the fact that there is a demand for money among borrowers, we have been conducting studies on how best implement the Act, including looking into ways to prevent borrowers from falling into distress because of the inability to borrow new money. Also, there are some gray areas in the Act itself. For instance, in regards to the issue of restricting the total amount of credit that can be provided to each borrower by all money lenders on an aggregate basis, I have instructed the Project Team on Money-Lending Systems, Senior Vice Minister Kouhei Ohtsuka and Parliamentary Secretary Kenji Tamura to properly examine and determine borderline issues and other such operational problems. As for the specifics, we are currently performing the task of broadly seeking the opinions of members of the Democratic Party in policy meetings, as well as the respective opinions of the Social Democratic Party and the People's New Party on an individual basis. I am expecting a report based on such opinions and comments. If further examination is required based on my judgment, I will instruct them to examine specific matters more deeply.

Q.

Does it mean you have not yet confirmed the content of the released draft titled “10 Measures to be taken for the Borrowers Contrived from Their Perspective”?

A.

I have not read it yet. What I have always said is to focus on the borrowers' standpoint.

Q.

There were about 10 policies presented from the borrowers' standpoint...

A.

I have given instructions from the very beginning that they be presented from the borrowers' standpoint. Although lenders might have such problems as falling into management difficulties, solving them is not impossible. In actual fact, megabanks use dummy companies and invest their own funds. In that context, they could even share the responsibility of falling into difficulties. Therefore, the question is what to do with borrowers. I have given instructions to “determine, as to the issues in implementing the Act, what operational measures should be taken to prevent borrowers from falling into distress”. As we are still in the process of gathering a wide range of opinions, I am not saying “this would suffice” at this stage.

(End)