Press Conference by Shizuka Kamei, Minister for Financial Services

(Excerpt)

(Friday, May 21, 2010, from 8:33 a.m. to 8:48 a.m.)

Q.

Regarding the move by Germany to ban naked short selling of government bonds, sovereign CDSs, etc., please tell us what you think about it, as well as how the Japanese government views it.

A.

Well, Germany, or Europe, is situated in special circumstances that are different from those of Japan. In the case of Japan, the government bond market remains quite stable. Therefore, in that sense, the Japanese government has no intention of taking any particular action with respect to this issue. In our view, there is no singular turmoil that is taking place in JGB and other financial markets.

Q.

I think that given the turmoil in global financial markets, there is a growing tendency on a global scale to apply, once again, stricter financial regulations in wide-ranging shapes, including Germany's regulatory move just mentioned and the ongoing debates in the U.S. over a proposed financial regulation bill. What is Japan's viewpoint regarding this situation?

A.

As I have been saying for a while, we expect, above all else, the financial industry itself to work on its corporate management, as well as business operation, with a clear awareness of its social responsibility. We want it to bear this point in mind properly. In any case, as the Financial Services Agency (FSA) is constantly keeping a watchful eye on the financial world with the greatest possible attention, there is no need for us to rush to take steps similar to those being taken in the U.S. or Europe.

Q.

European markets have affected Japanese stocks and, today, also caused the New York stock market to experience its largest drop of the year. Foreign exchange markets have been affected considerably as well. What impacts do you think these turns of events are going to have on Japan?

A.

You see, I won't dare say that these events will have no impact. Not a few fluctuations overseas could eventually affect Japan in a variety of ways. We have to act constantly so no negative impact should reach here. As I just said, the FSA is keeping an eye on any such sign with the greatest possible attention. Given the ups and downs that occur in movements of stock prices and exchange rates, the most import consideration for Japan is, after all, how to run its real economy, as this serves as the foundation of all those markets. This brings me to believe that if our real economy is maintained soundly, it should be able to serve as one big bulwark to minimize the impacts from any such significant fluctuations in the financial, foreign exchange and other markets - this is the sort of thing that I find critical.

Q.

I would like to bring up the topic of Shinsei Bank. I believe that you also made a comment during last week's press conference in which you criticized the way that the bank had been managing its business and, as it turned out, the bank did report a massive loss for the second consecutive year in its P/L statements. What is your plan as to the timing for issuing a Business Improvement Order down the road?

A.

You see, we are examining the matter in various administrative respects now, which actually led to a little incident the other day where I have told off my staff for the first time since I took office. In the light of the oversight and inspection authority that we have, I said, "As the government is paying, which means using taxpayers' money, you, in the position of the staff, must assume a stricter attitude in what you do." This is in view of the fact that only some foreign senior officers were earning huge amounts of remuneration (even though the business was losing money). Even if the Shinsei Bank side is saying, as the reason for such treatment, that "they had special expertise", it just couldn't have been possible for them, assuming they had really been doing their jobs by exerting their expertise, to let the bank accumulate such an exorbitant loss - some hundreds of billions of yen - for two straight fiscal years. That is why I gave a few words of rebuke to my staff, saying, in effect, "What are you talking about?" As our (FSA) administrative section seems to be working harder to address the matter, I feel positive that the FSA will be able to give proper guidance from now on.

(End)