Press Conference by KATO Katsunobu, Minister of Finance and Minister of State for Financial Services

(Excerpt)

(Friday, May 30, 2025, ８:35 am to 8:39 am)

Q.

I would like to ask about Iwaki Shinkumi Bank (Credit Cooperative). Yesterday, the Financial Services Agency (FSA) issued a business improvement order. It has become clear that the Iwaki Shinkumi’s cover-up culture and fraudulent financing for many years. What do you think about the malicious nature of the Iwaki Shinkumi?
In relation to this, at the recent meeting of the Council of New Form of Capitalism Realization, you indicated a policy of formulating a plan to strengthen regional financial capacity by the end of the year. Recently, there have been a series of scandals involving regional financial institutions, not limited to Iwaki Shinkumi. What is your view on the possibility of affecting these government policies?

A.

Firstly, it was confirmed that Iwaki Shinkumi provided bypass loans to large credit customers in poor business conditions via a deposit account that had been opened without the consent of account holders for a long period of time and concealed the fact, that the embezzlement incident by a former employee was concealed, and that these actions were taken under the leadership of the management team. As a result, serious problems were found in the business management structure and legal compliance structure, etc. Therefore, on the 29th yesterday, the FSA issued a business improvement order to the credit cooperative based on the Act on Financial Businesses by Cooperatives.
It is very regrettable that the management of the credit cooperative concealed the fact for a long period of time, in addition to providing bypass loans. It is also extremely regrettable that while the credit cooperative received capital participation from the national government in order to contribute to the reconstruction of areas affected by the Great East Japan Earthquake, it took advantage of utilizing it to write off fictitious financing. The FSA takes this matter very seriously.
This business improvement order calls for a fundamental review of the management system of the credit cooperative, including the clarification of management responsibility. Based on this order, we will strongly guide the improvement of the credit cooperative’s business,and strictly confirm and verify the efforts for improvement.
With regard to the plan to strengthen regional financial capacity, I believe that there is no change in the situation in which regional financial institutions are expected to further demonstrate their ability to contribute to the regional economy, or so-called regional financial capacity. We need to continue our efforts to formulate such a plan.
This plan includes a review of the capital participation system as an environmental development that enables regional financial institutions to fully perform their roles required for the revitalization of regional economies. In examining the content, we believe that it is necessary to firmly consider how to ensure appropriate business management and business operations of target regional financial institutions, in light of the fraudulent financing incident of Iwaki Shinkumi, so that the capital participation of the national government will surely lead to the improvement of regional financial capabilities of regional financial institutions which receive capital participation.