Press Conference by Tadahiro Matsushita, Minister for Financial Services

(Excerpt)

(Friday, August 3, 2012, from 9:26 a.m. to 9:38 a.m.)

[Questions & Answers]

Q.

First, regarding insider trading related to public offerings of new shares, the Securities and Exchange Surveillance Commission (SESC) recommended that the Financial Services Agency (FSA) take administrative action against Nomura Securities. Could you comment on the recommendation and tell me about the schedule for taking administrative action?

A.

I would like to refrain from commenting on a specific administrative action that may be taken against an individual securities company. In any case, the FSA will consider what administrative action to take in light of the SESC's recommendation, the results of the series of internal investigations conducted by Nomura Securities and corrective measures adopted by the company. For the moment, I have nothing more to add.

Q.

I have one more question. Today, the deadline arrived for the submission of report that the FSA ordered 12 securities companies to submit with regard to the review of their information management systems. Could you tell me about future actions.

A.

I feel that one month has passed in an instant. In light of the series of cases of leakage of insider information, the FSA ordered 12 major securities companies that play an important role in underwriting the public offering of new shares to review their systems for managing corporate information, as you know. The companies are required to submit their reports by today. The FSA hopes that the companies will continue efforts to strengthen their systems for managing corporate information following the review with strong awareness of the public nature of their role.

Q.

Regarding the previous question (concerning the order for the 12 securities companies to submit reports), while the deadline arrived today, you have been calling for them to voluntarily announce the results of their review. May I take it that the FSA does not intend to disclose the summary of the results?

A.

We have sent a strong message that we attach importance to securities companies' voluntary efforts. As we are encouraging them to announce the results, I am hoping that they will do so.

I understand that the companies are preparing to announce the results of their review in the near future. As we sent a strong message that they should make voluntary efforts, I am hoping that they will announce the results.

Q.

Yesterday, Aozora Bank announced that it will hold an extraordinary general shareholders' meeting regarding the repayment of public funds. Could you tell me the current status of negotiations and the government's stance on the terms of repayment? Is it possible to extend the deadline for the conversion of preferred shares into common shares in light of the target amount of recollection of public funds that was set forth in the past?

A.

I am aware that yesterday, August 2, Aozora Bank issued a press release to the effect that it will consolidate the path to full repayment of public funds and that it is close to agreeing with stakeholders on a new capital policy that serves shareholders' interests. I presume that you also know of the press release.

According to this press release, Aozora Bank is working out the details of the repayment plan, so the FSA will refrain from making comments at this time.

Q.

What do you think is important in terms of a desirable way of repaying public funds?

A.

Regarding Aozora Bank's repayment of public funds, there are three principles concerning the repayment that Deposit Insurance Corporation clarified. As you know, the three principles are maintaining the soundness of management, avoiding imposing a burden on the public and ensuring the stability of the financial system. I expect that the repayment will be made in an amount that takes account of these principles. I understand that Aozora Bank is working out the details of a comprehensive plan, including the terms of repayment, so I would like to refrain from making comments on behalf of the FSA.

Q.

As for the conversion into common shares, there has until now been no case in which such conversion was made in relation to the injection of public funds. Is there any reason why special consideration is given to this case? Is it a viable option to extend the deadline for the conversion?

A.

The extension of the deadline belongs to a matter of a specific administrative action, so I would like to refrain from answering your question with any prejudgment.

Q.

I am Nakamoto from the Financial Times.

I have a question concerning the SESC's investigation. A media report has said that during the investigation, the SESC has not held hearings with the companies regarding which it issued a recommendation, such as Japan Advisory, or sales personnel suspected of being involved in insider trading. Is it possible that the FSA does not hold hearings with the subjects of the investigation before issuing a recommendation?

A.

We do not comment on the contents of the SESC's investigations, so I cannot discuss specifics here.

Generally speaking, the SESC strives to collect and analyze useful materials and information in order to conduct effective and efficient investigation. If an illegal practice is recognized, I understand that the SESC takes appropriate actions in accordance with laws. I would like to refrain from commenting on further specifics.

Q.

You may answer my question in general terms. Is it possible that you would take an administrative action without holding hearings with the subjects of the investigation?

A.

I would like to refrain from making any further comments. The SESC is striving to collect and analyze useful materials and information, and I understand that it takes appropriate actions in accordance with laws if an illegal practice is recognized.

Q.

Could you comment on the re-listing of JAL?

A.

I have no information regarding that. As that concerns an individual company's judgment, I would like to refrain from making comments.

Q.

I am Yamamoto from Nippon Cultural Broadcasting.

Regarding JAL, the Tokyo Stock Exchange announced earlier today that it has approved the listing of JAL and the listing is scheduled for September 19.

Could you comment on the re-listing?

A.

I have not received any specific information regarding that, so I would like to refrain from making comments. However, I am aware that there have been various debates on that in the Diet.

Thank you very much.

(End)