[Hot Picks from the Financial World]

  • *We deliver the hottest information of the times in this section, selected from among questions and answers given at the Minister's press conferences, etc.

    If you wish to find out more, we invite you to visit the ''Press Conferences'' section of Financial Services Agency's website.


Q.  All non-life insurance companies reported to the Financial Services Agency (FSA) about their respective deadlines for the third report on non-payment cases. I would like to hear the Minister's view on the deadlines they have set.

A.  Just recently, on November 17, from the standpoint of prompting them to look into cases of missed payments of ancillary insurance claims and to make additional payments to the insured, etc., we requested that non-life insurance companies report by Friday, December 8 matters including the timing of the completion of their final inquiry and all of them did submitted such a report. While we will scrutinize the content of their reports, I would also like to see them act responsibly, based on their respective management decisions, in their efforts to unravel the whole scope of non-payment cases and pay insurance claims to the insured, etc. in accordance with the inquiry completion timeframe that they have set.

(from the press conference following a cabinet meeting on Tuesday, December 12, 2006)


Q.  I would like to hear your views on the recent discovery that major non-life insurance companies were charging too much in insurance premiums for 2x4 houses.

A.  I find regrettable the fact that such mistakes were being made at customer service counters in such a basic component of insurance, namely, charging excessive premiums. While this is not a case of non-payment, I still want the companies to devise ways to steadfastly improve their basic management practices

(from the press conference following a cabinet meeting on Tuesday, December 12, 2006)

[Securities tax regime]

Q.  Can you please share your views on the securities tax regime?

A.  Given the decision to discontinue the current securities tax regime after a one-year extension, which is different from the idea of a straightforward extension for which I have been expressing my support, that which I had requested did not quite receive full approval. On the other hand, do I have high hopes that how a future securities tax regime should be formulated will be discussed in further depth among the ruling parties, seeing that there is a plan to develop a final proposal, with the intention to introducing it in FY 2009, upon deliberating factors such as the state of securities markets and the asset holding patterns, particularly in regards to stocks, of individual investors, and examining steps to, for instance, expand the eligibility of profits and losses from different financial products for combined taxation purposes.

(from the press conference following a cabinet meeting on Friday, December 15, 2006)

[Selection of an acquiring party of Ashikaga Bank]

Q.  Given that public bidding for the Ashikaga Bank acquisition has just closed, can I please ask what your impression is on how this bidding has developed?

A.  We received a large number of applications. Although, regrettably, I cannot give you a detailed account of the number and content of those applications, I have found them to be quite reassuring. We now hope that the understanding of those in the residential and business communities in the region will be gained and also that the process ahead will be one in which transparency in the market in Japan for this type of transaction is ensured and the principle of market competition is in place with foreign companies also participating therein, and that, above all, it will produce a reasonable outcome. In any case, I feel quite encouraged by the large number of applications that we received.

(from the press conference following a cabinet meeting on Tuesday, December 19, 2006)

[Nikko Cordial]

Q.  With respect to the issue of Nikko Cordial Corporation's engagement in inappropriate accounting procedures, the Securities and Exchange Surveillance Commission (SESC) recommended the FSA charge 500 million yen in penalties. I would first like to hear your views on this incident.

A.  Nikko Cordial Corporation is indeed a leading financial institution in Japan. In that sense, this is a very unfortunate turn of events. I am well aware that properly disclosing corporate financial information is extremely important for securing the trust of investors. The case in question represents a situation where in the parent company of a securities company that operates as a broker in securities markets was charged with a statutory violation in relation to a disclosure obligation, an important area of its operation. I must say that I find it regrettable.

(from the press conference following a cabinet meeting on Tuesday, December 19, 2006)


Q.  The Nikko side made a comment that could be interpreted to mean that they would be making corrections to their SPC consolidation, etc. for reasons different from those pointed out by the SESC. Please tell us of your view on the way Nikko is dealing with this issue.

A.  Cordial Corporation said in its information for timely disclosure that: (a) the valuation gains from EBs that it had reported were incorrect, (b) it decided that NPIH should be consolidated because NPI had acquired NPIH, but that during the press conference that followed Nikko reportedly argued that: (a) the EB handling in question was an operational error on the part of one employee who made a mistake in the issuing procedure and that Nikko therefore had no intention of overstating its profits, and (b) the accounting procedures that it took when it excluded NPIH from the scope of consolidation were proper. According to an explanation provided to us by the SESC, however, Cordial Corporation had reported to the SESC that: (a) NPI Holdings, all of whose shares are owned by its subsidiary, Nikko Principal Investments, and which is effectively controlled by Nikko Principal Investments as well, should be covered in its consolidation scope, a fact that Nikko Cordial admits in its own words, and that (b) it had reported evaluation gains, which it should not have done, by making up false issue dates, etc. for EBs, which it admits to not consisting a simple operational error on the part of one employee. In any case, we are, as part of the administrative judgment procedures, now requesting that Nikko Cordial Corporation submit a written response by January 16 outlining the facts of the alleged violation and the subsequent penalties. Any disputes that may arise as to the facts uncovered by the SESC or any other related matter will certainly be discussed in an administrative judgment setting. Therefore, with Nikko's response to this case expected to be filed by January 16, we will meanwhile be waiting in anticipation for a solid answer from them.

(from the press conference following a cabinet meeting on Friday, December 22, 2006)

[General Overview of 2006]

Q.  Today's press conference after the Cabinet meeting will be the last for the year. Please provide a general overview of the year and how you would rate it.

A.  The Prime Minister stated that he has been working strenuously, and I too feel the same, as this is my first experience as a Cabinet member. Most of all, the Money-Lending Business Control and Regulation Law came into effect, as did the Trust Business Law. In addition, the prospects for promoting the ''Challenge Again'' initiative have become clear. In that sense, I have been able to come all this way, thanks to everybody's cooperation. I am relieved that progress has been made without any major hiccups.

(from the press conference following a cabinet meeting on Tuesday, December 26, 2006)

[Multiple Debt Problem]

Q.  What are your thoughts on the measures, such as establishing a buffer or an inquiry counter?

A.  As you may be aware, two elements are indispensable in the counseling framework, namely, debt consolidation and family budget management. The problem cannot be solved by either of these elements alone, and an extremely high level of expertise is required in both of them. If I am allowed to go further, it would be even better if someone plays the role of a counselor on psychological matters, to be in charge of encouragement. Expertise is required in three areas, and these tasks cannot be undertaken by a single person. Especially considering that multiple debtors are scattered all over the country, it is indispensable to develop a powerful prefectural and municipal promotion framework and a network of organizations.

(from the press conference following a cabinet meeting on Tuesday, December 26, 2006)

[Consolidation of Stock Exchanges]

Q.  Do you think it is desirable for Japan's six largest stock exchanges to be consolidated into one exchange?

A.  While I am aware of the news reports, I have no direct remarks on them. If I am allowed to take a freehand approach in considering this, I think it is definitely important for each stock exchange to further deepen their interaction with each other. In my mind, I suppose the Tokyo Stock Exchange (TSE) is like Ryogoku Kokugikan, and each region has a local league with a sumo ring where wrestlers can perform. As the plan to consolidate the six largest stock exchanges in Japan is about the enhancement of functions, I think it would be desirable if it involves exploring an approach to direct financing for what I call the new era, supporting it together with business companies, and growing together by complementing each other.

(from the press conference following a cabinet meeting on Friday, January 5, 2007)

[Bank of Japan]

Q.  There are increasing prospects for the Bank of Japan (BOJ) to decide to implement another interest rate hike at the Monetary Policy Meeting and objections to this are growing. What are your views on another interest rate hike?

A.  We fully understand that they have concerns over the economic climate from their respective standpoints. There are various causes of concern when the approach to monetary policy is considered assuming that economic trends vary from region to region, or put differently, there are winners and losers by region, before the House of Councilors election. However, at the macro level, the BOJ has exclusive control over monetary policy unilaterally, and we are in the position to show maximum respect for its decision.

(from the press conference following a cabinet meeting on Tuesday, January 16, 2007)


Q.  The BOJ decided not to go ahead with another interest rate hike at the Monetary Policy Meeting. What are your thoughts on this decision? Some people have pointed out that this has left some issues in terms of dialogue between the BOJ and the market or the government. Your views on this will also be appreciated.

A.  The BOJ exclusively controls monetary policy and made the judgment responsibly in consideration of the given conditions. However, what bothers me slightly over the relationship with the government is that the BOJ has some explaining left to do in the future, considering that the BOJ's message last year was to ''raise the interest rate in January unless there is a catastrophe.''

(from the press conference following a cabinet meeting on Friday, January 19, 2007)


Q.  What is your perception of the new incident revealed at Dai-ichi Mutual Life Insurance Company relating to the non-payment of medical insurance claims concerning optional extras? How will the FSA deal with this matter?

A.  Insurance companies and user protection are themes that we should always aim to address as a matter of top priority. It is extremely regrettable that this is still not strictly enforced. It is hoped that Dai-ichi Mutual Life Insurance Company will provide a sufficient explanation and demonstrate actual improvements in the future.

(from the press conference following a cabinet meeting on Friday, January 19, 2007)


Q.  In the press, there were some reports about 200 to 300 cases in which cash exceeding ¥100,000 had been transferred from ATMs at Shinkin Banks in the Kanto-Koshinestu region. Is the FSA aware of these facts? Are there other similar cases? Please explain how the FSA will respond to this situation in the coming weeks.

A.  We have been informed of the incidents that arose at some Shinkin Banks where the transfer of cash exceeding ¥100,000 became possible. I will refrain from commenting on the details, as they relate to individual financial institutions. We will first identify and scrutinize the facts, and then take all possible measures to prevent such incidents from arising again.

(from the press conference following a cabinet meeting on Tuesday, January 23, 2007)

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