Press Conference by Ikko Nakatsuka, Minister for Financial Services

(Excerpt)

(Tuesday, October 16, 2012, from 11:55 a.m. to 12:10 p.m.)

[Opening Remarks by Minister Nakatsuka]

Today, a cabinet meeting was held, followed by a meeting of the Reconstruction Promotion Committee.

I am considering visiting Laos and Singapore from October 17 (Wednesday) to 20 (Saturday), and scheduling coordination is now being made. I am planning to participate in an ASEAN Ministerial Meeting on Women in Laos and exchange opinions with financial-sector officials and executives in Singapore and Laos.

[Questions & Answers]

Q.

Regarding the trip you mentioned now, what are your objectives and the points of your interest regarding the meeting on women and financial issues?

A.

The first ASEAN Ministerial Meeting on Women will be held in Laos. When I was a deputy minister, I was in charge of gender equality. Last year, I attended the APEC Women and the Economy Summit in San Francisco. I also attended a meeting in Cambodia (East Asia Gender Equality Ministerial Meeting), in which the Laotian representative proposed to hold the ASEAN+3 gender equality meeting in Laos. Discussions will be held on such issues as how to establish a framework for cooperation, including the organizing of ministerial gender equality meetings in East Asia.

In addition, Japan needs to make efforts to harness the Asian economic growth in the financial sector as part of the Comprehensive Strategy for the Rebirth of Japan. Therefore, I would like to use my visit to Laos as an opportunity to exchange opinions with the financial authorities of the country.

In Singapore, I would like to exchange opinions with the financial authorities of the country about the impact of the European problems on Asia and international financial regulatory reform. The Comprehensive Strategy for the Rebirth of Japan includes an initiative to make Japan an Asian financial center. To enhance competitiveness in the financial sector, I would like to exchange opinions with the financial authorities and executives of the Singapore Exchange about the country's initiatives and challenges.

Q.

Regarding a media report about the deposit insurance system, foreign banks' Japanese branches are currently not covered by the system. Do you think it is necessary to distinguish between domestic banks and foreign banks' Japanese branches?

A.

Discussions on that matter are ongoing. We are paying attention to the discussions and listening to the opinions of relevant people. Some people are supporting the idea (of extending the deposit insurance coverage to foreign banks' Japanese branches) while others are opposing it. I hope that discussions will be held from various perspectives.

Q.

Regarding your visit to Singapore, in Japan, the Tokyo Stock Exchange (TSE) and the Osaka Securities Exchange (OSE) will carry out business integration next January. Moreover, following the amendment of the Financial Instruments and Exchange Act, a plan to create a comprehensive exchange is proceeding and you are devoting efforts to it. As Japan tries to make Tokyo the main Asian market as you mentioned earlier, what kind of relationship would it like to form with Singapore, whose presence as a major Asian market is growing? For example, would you like to make use of the results of your exchange of opinions with Singapore officials to strengthen the relationship? Could you tell me about what you have in mind in relation to your planned visit?

A.

I hope that a Japanese comprehensive exchange will be created and Japan and Singapore will become good rivals. In Japan, the amended Financial Instruments and Exchange Act has been enacted. Although the regulatory and supervisory frameworks have been unified, there are still various challenges, including the integration of computer systems and the unification of accounts and taxation. I will look at the situation in Singapore and if I find something that may be useful in Japan, I would like to actively adopt it so to make Japan a good rival of Singapore.

Q.

I have a question concerning Japan Post Group's new services. Will approval of the new services be conditioned on the release of government-held shares or the sale of shares in the two financial postal companies by Japan Post Holdings?

A.

Regardless of whether such conditions should be set, I hope that plans for the business models of Japan Post Group, Japan Post Bank, and Japan Post Insurance will be clarified. The sale of shares may be related to the business models. I would like to ask managers to make clear what kind of company they want Japan Post Bank and Japan Post Insurance to be.

Q.

I am Sonoda from The Tsushin-Bunka Shinpou.

Regarding the postal services, Chairman Nishimuro of the postal privatization committee stressed that new products will be approved one by one, not all at once. Of the products for which applications have been received, which do you think are likely to be approved at an early date, although that may be affected by various matters such as stock listing?

A.

As I always say, we must implement two administrative procedures in accordance with the Postal Service Privatization Act and the Banking and Insurance Business Acts. Based on the results of the administrative procedures, a decision will be made as to whether or not approval should be granted after a certain period of examination. As to whether the seven products will be approved all at once or one by one, I would like to refrain from making comments, as that decision depends on the examination. In any case, approval will not be granted until the administrative procedures have been completed.

Q.

You said that managers should make clear their plans for the business models of Japan Post. Do you think that enough has not been done in that respect?

A.

In that respect, I hope that managers should make their plans clear not only to us but also to the general public.

Q.

Regarding Nagano Prefecture's employee pension fund for construction workers, this morning, Nagano prefectural police started their search of the office of RB Investment & Consulting Co., Ltd., a Tokyo-based investment fund company, on suspicion of fraud related to the huge losses arising from investment in unlisted stocks. What do you think of the responsibility of a fund investment company suspected of involvement in such a case? Also, what kind of action is the Financial Services Agency considering?

A.

I would like to refrain from commenting on specific administrative actions. In any case, we routinely examine the appropriateness of business operations of financial institutions, in terms of whether they are discretionary investment managers or trust banks, through inspection and supervision. If a legal violation is recognized, the FSA takes strict actions.

Q.

There was a media report that as fund management companies are not registered, an administrative action stronger than issuing a warning will not be taken. Will issuing a warning be the most that the FSA can do?

A.

I would like to refrain from commenting on specific administrative actions. Generally speaking, fund management companies are required to submit a notification of business opening to the authorities. Various administrative actions may be taken against companies depending on whether they are subject to the requirement for registration, approval or notification.

Thank you very much.

(End)