Speeches and Statements by Prime Minister Junichiro Koizumi



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(Provisional translation)

Statement by Prime Minister Junichiro Koizumi

November 29, 2003

1. Today, the Ashikaga Bank, Ltd. reported its financial condition at the semiannual settlement of accounts as of end-September 2003 to the Financial Services Agency, and submitted a notification of the fact that "the assets of the bank are insufficient to clear outstanding debts and there is a risk of ceasing to repay deposits and other debts based on the business or financial condition" in accordance with the Article 74.5 of the Deposit Insurance Law.

2. Considering the aforementioned situation, today, I held a meeting of the Financial System Management Council. Based on a decision by the Council, I made a determination on the necessity to take a measure for the Ashikaga Bank in accordance with the Article 102.1.(3) of the Deposit Insurance Law, and at the same time, decided that the Deposit Insurance Corporation will acquire all the shares of the bank, namely the commencement of special public management. The bank has a large number of depositors and borrowers including small- and medium-sized companies mainly in Tochigi prefecture. In light of the size of the bank and its extremely large lending market share in the prefecture, it is indispensable to maintain its financial operations in the region under the current difficult financial circumstances. Taking all of these into account, I determined to take the measure in accordance with the Article 102.1.(3) of the Deposit Insurance Law in order to prevent any critically significant disturbances in the maintenance of orderly functioning of the financial markets in the region.

3. Under the new management team selected hereafter, the Ashikaga Bank is to undertake management reforms, while ensuring orderly operations as a special public management bank whose 100 percent of shares are held by the Deposit Insurance Corporation. Furthermore, when it is necessary for continuation of the bank's operations such as the repayment of deposits, I expect the Bank of Japan would provide liquidity based on the Article 38 of the Bank of Japan Law.

4. Under this framework, after the determination on the commencement of special public management, the Ashikaga Bank continues its businesses as usual and all types of debts including deposits will be fully protected and will be repaid at the due date without any problems. As for lending, due consideration will be paid to bona fide and sound borrowers in view of high demand for loans towards the yearend.
In addition, I will establish an inter-agency liaison council on this matter as soon as possible, in order to ensure the stability of finance and economy of the region where the bank is operating.
I hope all of its depositors, customer companies and others would feel secure and calmly respond to the situation.

5. The Government will continue its commitment to making double assurance on the stability of the financial system and also on the protection of depositors and maintenance of orderly functioning of the financial markets in close cooperation with the Bank of Japan.


1.	Today, the Ashikaga Bank, Ltd. reported its financial condition at the semiannual settlement of accounts as of end-September 2003 to the Financial Services Agency, and submitted a notification of the fact that "the assets of the bank are insufficient to clear outstanding debts and there is a risk of ceasing to repay deposits and other debts based on the business or financial condition" in accordance with the Article 74.5 of the Deposit Insurance Law.
2.	Considering the aforementioned situation, today, I held a meeting of the Financial System Management Council. Based on a decision by the Council, I made a determination on the necessity to take a measure for the Ashikaga Bank in accordance with the Article 102.1.(3) of the Deposit Insurance Law, and at the same time, decided that the Deposit Insurance Corporation will acquire all the shares of the bank, namely the commencement of special public management. The bank has a large number of depositors and borrowers including small- and medium-sized companies mainly in Tochigi prefecture. In light of the size of the bank and its extremely large lending market share in the prefecture, it is indispensable to maintain its financial operations in the region under the current difficult financial circumstances. Taking all of these into account, I determined to take the measure in accordance with the Article 102.1.(3) of the Deposit Insurance Law in order to prevent any critically significant disturbances in the maintenance of orderly functioning of the financial markets in the region.
3.	Under the new management team selected hereafter, the Ashikaga Bank is to undertake management reforms, while ensuring orderly operations as a special public management bank whose 100 percent of shares are held by the Deposit Insurance Corporation. Furthermore, when it is necessary for continuation of the bank's operations such as the repayment of deposits, I expect the Bank of Japan would provide liquidity based on the Article 38 of the Bank of Japan Law.
4.	Under this framework, after the determination on the commencement of special public management, the Ashikaga Bank continues its businesses as usual and all types of debts including deposits will be fully protected and will be repaid at the due date without any problems. As for lending, due consideration will be paid to bona fide and sound borrowers in view of high demand for loans towards the yearend. In addition, I will establish an inter-agency liaison council on this matter as soon as possible, in order to ensure the stability of finance and economy of the region where the bank is operating. I hope all of its depositors, customer companies and others would feel secure and calmly respond to the situation.
5.	The Government will continue its commitment to making double assurance on the stability of the financial system and also on the protection of depositors and maintenance of orderly functioning of the financial markets in close cooperation with the Bank of Japan.