Press Conference by Ikko Nakatsuka, Minister for Financial Services

(Excerpt)

(Tuesday, November 27, 2012, from 10:32 a.m. to 10:47 a.m.)

[Questions & Answers]

Q.

I will ask you about the approval of Japan Post Insurance's new services, regarding which you talked about in a door-step interview last Friday.

Minister of Internal Affairs and Communications Tarutoko said the new services will be approved by the end of November, so I understand that approval will be granted this week. Compared with last weekend, has your thinking changed?

A.

That was not Friday but Thursday, I think. The postal privatization committee wrapped up its opinion paper. I am aware that Minister Tarutoko made such a comment, but I would like to refrain from commenting on that.

In any case, the position of the Financial Services Agency (FSA) is as I have already stated. The FSA's examination has not made sufficient progress, so it would be premature to grant approval.

This opinion was expressed under such circumstances, so we have conveyed our intention to hold close consultations with relevant ministers. In addition, while that concerns the procedures based on the Postal Service Privatization Act, the FSA must make judgment independently as to whether to grant approval based on the Insurance Business Act. That is our responsibility.

In any case, we will continue to conduct our examination appropriately so that we can fulfill these two responsibilities.

Q.

In relation to Japan Post, Chairman Nishimuro said after Thursday's press conference that regarding the other three new services, including Japan Post Bank's housing loans, his committee wants to complete its examination quickly and make judgment as to approval at an early date, desirably by the end of the year. The FSA is naturally involved in the approval process regarding the other three new services as the supervisory authority. While Chairman Nishimuro appears to aim to approve the remaining three new services at an early date, what is the FSA's stance toward those services?

A.

As I have already stated, our examination has not made sufficient progress. We have expressed our opinion to the privatization committee on several occasions, so I would like the committee to make its judgment in light of our opinion. In any case, you may substitute the Banking Act for the Insurance Business Act in my earlier reference to Japan Post Insurance. Regarding approval based on the Banking Act, we are responsible for making judgment independently. So, we would like to fulfill these two responsibilities.

Q.

My question may be somewhat similar to the previous question, but what do you think of the division of opinion within the cabinet? Also, you said previously that you may meet with Minister Tarutoko in the future. Could you give me some idea of the timescale, such as when you are going to meet with him?

A.

We are proceeding with the examination of the new services based on the division of work between relevant ministers in accordance with laws. In that sense, there is no division of opinion within the cabinet.

As this concerns the approval of a specific service, I would like to refrain from commenting on the schedule.

In any case, we need to hold consultations with other people in some respects and make our judgment independently in other respects. We will hold consultations when necessary to do so.

Q.

Minister for Postal Privatization Shimoji said that a certain direction bas been indicated after the discussion held among relevant ministers today. May I take it you are denying his statement?

A.

Today, I met with relevant ministers before and after the cabinet meeting. We are continuing our discussion.

Q.

Do you mean that granting approval is not a decided course of action?

A.

We are doing coordination work.

Q.

Also, you said approval based on the Banking Act or the Insurance Business Act and approval based on the Postal Service Privatization Act are different matters. Am I correct in understanding that in today's discussion, a decision was not reached as to approval based on the Postal Service Privatization Act? Or was a certain decision reached as to that?

A.

I am consulting with relevant ministers.

Q.

That seems to deny Minister Shimoji's statement.

A.

That is not correct. I am consulting with relevant ministers.

Q.

Although it is not clear whether the change of government will occur, I would say it is not desirable to make a decision on matters like this before the election. What would you say to that?

A.

As I already mentioned, we are proceeding with our examination in accordance with relevant laws.

Q.

Is it possible that different decisions will be reached regarding the approval based on the Postal Service Privatization Act and the one based on the business laws? It would be desirable to combine the two approval processes, if I may say so.

A.

Regardless of whether it is appropriate or not, examination is conducted according to different procedures, so in theory, it is possible that different decisions will be reached, as I said on Thursday.

Q.

Let me change the subject. Europe appears set to follow suit with the United States in postponing the implementation of Basel III. Could you comment on that and also tell me about Japan's stance on Basel III?

A.

Japan's stance is as I stated when the United States announced its intention to postpone the Basel III implementation. As this is an international agreement, Japan will continue to make efforts to implement it properly.

Q.

So you say Japan will “make efforts to implement it,” rather than “will implement it.” May I take it that Japan will implement it according to schedule?

A.

We are making preparations with a view to doing so.

Q.

I would like to ask you about this matter as one of the major incidents of this year. In March, Incubator Bank of Japan (Nihon Shinko Ginko) was sold, marking the completion of the failure resolution. The failure resolution was carried out in a way that made depositors bear responsibility. Among the members of the bank's board of directors was the member of the Diet Masaaki Taira of the Liberal Democratic Party. He was not only a board director but bore heavy responsibility as the chairman of the board. During the resolution process, he expressed his willingness to return his executive remuneration in an interview with Sankei Shimbun. Since then, have you been informed of the return of his remuneration?

A.

Regarding the former Incubator Bank of Japan, I hear that Resolution and Collection Corporation has filed a lawsuit to pursue the responsibility of the former management team. In that sense, this matter is being disputed in court, so I expect that the facts will be clarified through court proceedings. As to whether or not the former executives have returned their remuneration, I would like to refrain from making comments. In any case, I expect that the responsibility of the former management team will be rigorously pursued by Resolution and Collection Corporation, so I will keep a close watch on future developments.

Q.

Each of the directors bore heavy responsibility and some of them took responsibility in their own ways. One took his own life. While some directors took responsibility in a grave manner, the chairman of the board who is a member of the Diet was ignorant of the circumstances of the failure. The fact that the member of the Diet who was serving in that post was quite ignorant appears to be inappropriate from the perspective of the bank's governance and in light of his position as a member of the Diet. What would you say to that?

A.

As he was serving as a director, he naturally had a duty of care. There are various factors that led to the failure, and he should properly bear responsibility as a manager. As for his position as a member of the Diet, I do not think that he was appointed to the board because of that position, but I believe that members of the Diet must exercise increased self-discipline.

Q.

Regarding Basel III, if we consider why the decision was made to implement Basel III in the first place, it seems, in the eyes of Japan, to be somewhat unreasonable that Europe and the United States will postpone their implementation. In this respect, doesn't the FSA plan to continue to call on Europe and the United States to implement Basel III at an early date or send a message such as that it should be implemented according to schedule?

A.

Regarding international financial regulatory reform, many major financial institutions have failed in the past several years, producing various effects on the financial system and the real economy. In light of that, discussions on financial regulatory reform have been conducted. On the other hand, I am aware of the argument that the possible impact of regulation on the real economy should be taken into consideration.

When the United States issued a comment concerning Basel III, I heard that the country expressed an intention to continue to make efforts to implement it at an early date, as it attaches importance to the agreement on the implementation deadline of Basel III, so I am placing hopes on that.

Q.

Let me ask you this question again. I understand that on Thursday, Minister Tarutoko instructed the ministry staff to do coordination work with a view to granting approval by the end of November, but do you say that is not the case? In short, although he has set a deadline for the end of November, you said the FSA is not doing coordination work with a view to granting approval by then. But may I take it that the FSA is otherwise doing coordination work? Or is the FSA doing coordination work with a view to granting approval by the end of November? Which is correct?

A.

Regardless of that, we are doing coordination work in all respects.

(End)