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Speeches and Statements by Prime Minister Junichiro Koizumi

(Provisional Translation)

Statement by Prime Minister Junichiro Koizumi

May 17, 2003

PToday, I held a meeting of the Financial System Management Council and, after a decision by the Council, I made a determination on the necessity to take a measure to recapitalize the Resona Bank based on the Article 102. 1. (1) of the Deposit Insurance Law. I also set a time limit as May 30, 2003, by which the bank can submit an application for recapitalization.
QAlthough, at the settlement of accounts as of March 2003, the capital adequacy ratio of the bank went below 4 percent which is the minimum requirement for sound domestically operating banks, the bank is not faced with problems such as deposit drain nor difficulty in raising money in the market at present. The measure to be taken this time is to recapitalize a financial institution not in failed conditions and to recover its soundness, which is different from measures for failed or insolvent financial institutions based upon the Article 102. 1. (2) or (3). Through this action, I will enhance the capital of the bank and thereby, prevent any critically significant disturbances in the maintenance of orderly functioning of the financial markets in Japan and in local areas where the bank is operating.
RAfter this determination, the concrete decision regarding the recapitalization will be made based on an application from the bank. I intend to secure its capital adequacy ratio well in excess of 10 percent in order to ensure the stability in banks' businesses and not to raise concerns of depositors and others.
SI believe that the soundness of the bank will be secured and its profitability will be enhanced through this recapitalization and thorough management reform. Since bank continues its businesses as usual and all types of deposits and transactions will not suffer from any problems, I hope all of its depositors, customer companies and others would feel secure.
TAt present, it is not in the situation where the implication of this event will affect the stability of the financial system. The Government is to continue to make assurance double sure on the stability of the financial system and also the protection of depositors and maintenance of orderly functioning of the financial markets in close cooperation with the Bank of Japan.