Provisional Translation

Q.

At regional banks, the trend toward integrations and mergers has been speeding up since last year, while SBI Holdings having put forth a regional bank alliance plan. In an ordinary session of the Diet, there was mention of considering a special law that would make it easier for regional banks to integrate. I’d like to ask for your outlook on this trend and the industry plan for regional banks.

A.

Currently, regional banks are facing a variety of challenges, including an ultra-low interest rate environment and declining populations. We are seeing various trends, such as trying to engage in business partnerships or mergers with financial institutions not just in one prefecture but in neighboring regions, and capital tie-ups with financial institutions in lines of business outside of regional finance. Also, there’s the SBI holdings plan. If it is executed, I think it will happen in Shimane prefecture and Fukushima prefecture. Basically, that situation constitutes a management decision of the given financial institutions. I’m not commenting on that, because it’s up to the management policies of the financial institutions. For the FSA’s part, we imagine that management strategies will be developed that take into consideration a range of future possibilities and that various initiatives will be taken, and as long as these efforts impact regional financial functions in ways that aptly strengthen those functions and improve corporate value, that’s fine. However, we have to make sure that a situation wherein regional banks become strong by such mergers but they bring no benefit at all to local businesses or even cause problems for them, doesn’t happen.