Press Conference by Taro Aso, Deputy Prime Minister, Minister of Finance, and Minister of State for Financial Services

(Excerpt)

(Friday, July 21, 2017, 10:18 am to 10:23 am)

[Questions and answers:]

Q.

With regard to the planned business integration between the Fukuoka Financial Group and The Eighteenth Bank, some media outlets are reporting that this integration is to be postponed indefinitely. As Minister of State for Financial Services, you might recognize that regional financial institutions face a challenging business environment. The aim of this business integration is apparently to strengthen their operating foundations, but the Japan Fair Trade Commission is concerned that this integration could undermine the competitive environment, and little headway has been made in reconciling these two conflicting positions. Please let us hear your opinion on the current situation.

A.

An indefinite postponement does not mean integration will never go ahead. This issue at hand is the relationship between The Eighteenth Bank and the Fukuoka Financial Group, and the biggest issue is that the Fukuoka Financial Group would control an 80% share in Nagasaki after the integration. This would be too high a percentage. Transferring one bank’s dealings to another bank gives rise to a number of issues. Asking business partners to move from one company to another is no simple matter for the banking business, or indeed any business. In that sense, this is not an issue that can be easily resolved. Realistically speaking, though, I think both sides recognize that these banks’ local markets are steadily shrinking and that, without some change, the situation will deteriorate to the point that these two banks will no longer be able to cope, so careful thought needs to be given to this matter to keep this from happening.