Provisional Translation

Q.

As most companies whose business year ends in March announced their financial results, it turns out that the situation has been more difficult for regional banks making profit margins with their conventional business models. What is your view on these financial results of regional banks? How will the Financial Services Agency review their financial results in light of any administrative actions on a forward-looking basis by taking their financial results into account?

A.

I think that the number of Megabanks as well as regional banks whose sales and profits are declining has been increasing. I suppose that the situation of Mizuho Bank may not be as same as that of the other Megabanks because of its extraordinary loss. It becomes more and more difficult for regional banks to make profit margins because of low-interest rate environment. This situation has been continuing. At present, we think that the overall financial system is sound while it is gradually difficult for banks to generate profits by simply implementing their conventional business models because of the narrower profit margins than before. In terms of this, we hope that regional banks should actively support various kinds of companies by offering loans based not on collateral but on their business operations. Some regional banks actually generate profits by introducing new business policy. As we are not going to conduct monitoring on regional banks based on the premise of administrative actions, in that sense we would like them to manage their business operations through their own efforts.

Q.

The European Commission has decided to fine the MUFG Bank nearly 70 million euros for taking part in a foreign exchange spot trading cartel in Europe. What is your view on that, and what is your response as the relevant authority?

A.

This case involves not only the MUFG Bank but also other European banks. I am aware that it has been officially announced that as much as 8.5 to 8.6 billion yen was fined on the MUFG Bank. I think that all relevant banks including the MUFG Bank should appropriately improve their internal control systems from the perspective of legal compliance.