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

(Excerpt)

(Friday, August 1, 2025, 10:07 am to 10:17 am)

Q.

SBI Shinsei Bank repaid all public funds yesterday. It has been 27 years since the special public management of the Long-Term Credit Bank of Japan, and although it took a very long time, I think we can finally say that the cleanup after the financial crisis of the late 1990s is over. What is your reaction as a financial administrator?

A.

First of all, regarding SBI Shinsei Bank, it completed the repayment of all public funds to the government on July 31. The FSA welcomes the fact that the Bank's public funds, which had been an issue for many years, have been fully repaid. As mentioned earlier, with the complete repayment of public funds by the Bank, all public funds injected during the financial crisis of the Heisei era have been repaid, so I believe we have marked an important milestone. In light of the past financial crisis, which had a significant impact on the Japanese economy, and the reflection on the responses to the crisis, the FSA intends to continue its efforts to ensure the soundness of individual financial institutions and the stability of the financial system by analyzing and identifying potential risks as early as possible.

Q.

It has come to the fore that Shinkin Central Bank will provide support to Tochigi Shinkin Bank, which has incurred large unrealized losses on Japanese government bonds. As long-term interest rates continue to rise, many regional financial institutions may be saddled with unrealized losses on Japanese government bonds. What are your views on the impact of the rising interest rates on the financial system?

A.

First of all, I am aware that Tochigi Shinkin Bank announced yesterday that it would utilize the capital support system in the shinkin bank industry and receive capital support from Shinkin Central Bank in order to further ensure its financial soundness. I am also aware that Shinkin Central Bank has received an application from Tochigi Shinkin Bank and will fully support its efforts to strengthen its management capabilities. I understand that shinkin banks incurred losses on valuation of securities in their fiscal year ended March 2025 due to rising domestic interest rates. While I refrain from commenting on the soundness of individual shinkin banks, I recognize that they as a whole have a solid capital base and are generally stable. The FSA will continue to closely monitor the financial soundness and risk management systems of regional financial institutions, including Tochigi Shinkin Bank, as well as the status of their securities investments, in order to ensure that they maintain their soundness and perform their financial intermediary functions.