Press Conference by Shizuka Kamei, Minister for Financial Services

(Excerpt)

(Tuesday, April 6, 2010, from 8:38 a.m. to 8:54 a.m.)

Q.

Regarding the postal service reform, you have said that you will consider lowering deposit insurance premiums - is this matter going to be considered at more or less the same time as the bill (for postal service reform) is finalized for submission (to the diet)? This relates to my next question; some in the financial world, assuming that the ceiling (on postal savings with Japan Post Bank) goes up to 20 million yen, have fundamental doubts about the appropriateness of its (Japan Post Bank's) coverage under the deposit insurance system. What do you have in mind as to how to sort out these circumstances?

A.

Well, I have not been informed accurately of what the financial world is saying. While debate seems to be raging in the press, I have been saying that I would consider any request voiced by the financial world, be it a request for raising the “pay-off” ceiling amount from the current 10 million yen, out of consideration that it would be better to do so from a perspective of attracting deposits, or rather from a standpoint of depositors, or be it a strong request to lower premium rates.

As I have been saying this for quite a while, we are not currently confronted with a situation where bank after bank might go bankrupt. I do not therefore, believe that there are concerns from the standpoint of depositors that make them feel that it (the “pay-off” ceiling amount) should be raised from 10 million yen. Nevertheless, I have been meaning to say that I am ready to consider any request for a higher cap, especially if that is based on the thought that doing so should work to the advantage of small- and medium-sized financial institutions in that they could then compete with megabanks in terms of level of trust from customers - but they say “no thanks.” I take it that they believe that they have enough trust from customers without having us go in that direction. As those financial institutions are thus confident about the robustness of their own stature, I have not called for any further input - that is how things stand now.

Q.

Another issue is that the rate of deposit insurance premiums went up sevenfold during the financial crisis (in the 90's) and now is probably a good time to lower it. Do you have any specific idea as to how much reduction would be acceptable?

A.

I believe that the (effective insurance premium) rate is currently around 0.084%, which, in my view, merits deliberations with a future reduction in mind, considering that the overall situation has now improved greatly and also that it would ease the burdens on financial institutions. On the other hand, if financial institutions feel fine about it, thinking that they can easily live with the current rate level, so be it. Because what they are paying into is, after all, a system that guarantees their own credit. That is how I see the current situation.

(End)