Press Conference by ASO Taro, Deputy Prime Minister, Minister of Finance, and Minister of State for Financial Services
(Monday, March 16, 2020, 6:24 pm to 6:32 pm)
Due to the widening impact of the recent coronavirus infections, we are receiving a great deal of concerned inquiries regarding financing, particularly with the fiscal year ending. In particular, we are hearing many concerns from micro, small, and medium sized business operators. Rather than growing worse over a long time, this has been sudden, especially as we entered February. Therefore, we want financial institutions to respond without fail in a way that takes into account the actual situations being faced by business operators. As there is no precedent for this situation, we ask the Japanese Bankers Association, and the Japan Finance Corporation and the Development Bank of Japan, both public and private financial institutions, to spare no effort to respond to financing needs. At the time of Lehman Shock, there was no cash in the market, but that differs completely from this case. This happened suddenly, so there are people who have no idea what will happen to their funding and how bad will the situation get. This did not happen gradually, so people do not know how much funding is necessary. It may be the case that they do not have enough money and it is the end of the fiscal year, so we want those at financial institutions to reach out to business operators. There are also some people who do not know that they will run out of money, so we are asking financial intuitions to speak with them about this. Mr. Takashima, Chairman of the Japanese Bankers Association, said they have already established a dedicated contact desk and have set up an emergency loan system. Also, they intend to learn about the actual situation that business operators are facing, and then offer new loans or rescheduling–which includes modifying loan conditions or setting back due dates–to work closely with business operators in responding thoroughly. Mutual arrangements have already been made within the Japanese Bankers Association, including regional banks under the umbrella of the association, and they are moving forward with responding in various ways.
Governor Mr. Tanaka of the Japan Finance Corporation said that they must strengthen their consultations system in order to quickly respond to the sudden increase in inquiries. The personnel reassignment of 1,600 people, a standard personnel reassignment that was scheduled for this March, was postponed. After that, there were not enough employees at their branches so personnel were sent from the head office to branches to provide assistance. For the first time ever, even some retirees who are capable and wanted to work were sent out to handle inquiries via telephone, and the hours of operation were extended.
President Mr. Watanabe of the Development Bank of Japan said that as this is a time of emergency, the first priority is to concentrate on the duties of emergency response. This is under the awareness that the true worth of the Development Bank of Japan is being tested. We definitely want them to live up to expectations. As we have stated this several times in the past, but until now there had never been a case wherein all three individuals met us at once. Regarding when this will end, in the case of this coronavirus problem, we cannot say the situation is resolved even it ends in Japan, but if it continues overseas. We have to take a great deal of things into account, not only Japan’s issues. We cannot obtain an unobstructed forecast of the near future, and this makes decisions difficult. Right now, we are asking that financial institutions make efforts to respond to the requests we have made.
At any rate, the most essential action is to work quickly to continue financing, thereby preserving the consequent employment and business.
[Questions and answers:]
In the economic measures up to the second round, you are carrying out packages of several policies on the financing side. What stance will the Ministry of Finance and the FSA take toward private financial institutions going forward?
Do you think that private financial institutions would really carry out such requests?
Borrowers are extremely wide ranging, so I imagine there will be problems if they do not support them as well.
Banks are not exactly the kind of institutions that run around handing out sympathy. That is pretty well known. And that is why we have to make sure that they understand that this current situation is no joke. It is through our monitoring that we know whether or not they are doing their jobs correctly. Moreover, we announce the results thereof, we are hurrying them for the answers, and are asking them to do things soon, and in that sense what we know is what comes from the banks, and there is a lot coming up, and I believe they are responding accordingly. Certainly, that can be understood from various information. I think they are doing the job, but this is something they have never done this before, and usually the only time a bank will ask if funds are OK is when a business is just about to go bankrupt. Asking beforehand is a practice for which there are no past examples, so they will have to do it for a while longer before we know if it is producing results, although we are expecting it will.
As you have explained, it will be too late if a borrower’s category is downgraded from ‘special-mentioned debtors under caution’ to ‘debtors under possible bankruptcy’. But in the tourism industry and elsewhere where cash flows have already become extremely tight, even if a company can borrow with no interest, they still have no idea when they will be able to pay it back or what will happen with their future cash flows, and there are business operators who are deciding to discontinue business.
There are also some managers who are thinking that if this suddenly ends in June, then tourists will come back and they will lose that money. There are also some people who will not do it because it is too troublesome. However, tourists have a lot of faith in Japan as an overwhelming tourist destination. When the disturbance caused by the coronavirus dies down, they may rather come here than go to Italy or Spain, for example. In that regard, I am of the belief that Japan will be the first place that will see the return of tourism.
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