Satoru Kishi, president of the scandal-tainted Bank of Tokyo-Mitsubishi, said in a recent interview with The Japan Times that he was against his reappointment April 21 as head of the nation’s banking federation.
“I wanted to be given a break if there was anyone to succeed me,” he said. However, since no other candidate could be found, he grudgingly accepted the federation’s decision to keep him.
In early February, Kishi had taken over as chairman of the Federation of Bankers Associations of Japan (Zenginkyo), succeeding Sanwa Bank President Naotaka Saeki, who stepped down when a bribery scandal broke involving his bank.
However, since Tokyo-Mitsubishi was later named in the same scandal, Kishi said he believed it would be inappropriate to remain in the post, and only agreed to continue for the sake of the banking industry — not his own interests. Indeed, in a news conference April 7, Kishi hinted he should be kept on as chairman because of the impression that two resignations in two months would leave on foreigners.
Commenting on the bribery scandals that have engulfed the nation’s financial institutions, Kishi raised no objections to prosecutors’ investigations into affairs involving banks and Finance Ministry officials. But he stressed that there is nothing wrong with talking to financial authorities outside the office environs. “I don’t think we were doing something very excessive,” he said, referring to the longtime tradition of wining and dining of Finance Ministry officials by the bank. “It is not unreasonable to get together and exchange opinions over dinner,” he said, adding that his bank has nonetheless prohibited such practices after the scandal broke because of the difficulties in distinguishing the boundaries of official business.
The scandal involves a Tokyo-Mitsubishi banker who prosecutors said bribed a Finance Ministry banking inspector by wining and dining him to the tune of 1.4 million yen in return for inside information. The banker has been given a summary order to pay a 400,000 yen fine.
Because the wining and dining of ministry officials had never been questioned in the past, the activity escalated, he said. The problem had to be corrected at some point, and this has led to the rush of a “self-cleansing action” brought about by prosecutors’ investigations, he said.
Kishi said it is important in Japanese culture that a leader resign to put an end to a scandal and let his organization start anew. However, he also said the internal penalties announced by Tokyo-Mitsubishi last month are severe enough. The penalties include a 20 percent salary reduction for over three months for Kishi.
On the reform of Zenginkyo, he said more banks should be able to participate in the organization’s internal discussions and in its contact with the government and the Diet. Zenginkyo has played a major role in adjusting member banks’ interests under the arbitrary control of the Finance Ministry. Kishi is the first chairman to publicly doubt the significance of that function.
Traditionally, the bank whose president serves as Zenginkyo chairman tends to represent the whole banking sector. In addition, the decision-making process is largely influenced by six major banks and is likely to have a narrow focus, Kishi said. It is beneficial for any bank to have contacts with politicians, he believes, saying, “That role should be shared by many.”
Regarding the capital injection of 100 billion yen in public funds to Tokyo-Mitsubishi, Kishi stressed that the bank has only borrowed the money from the Bank of Japan to issue subordinated bonds and has not actually used “taxpayers’ money.”
“We are going to return it with carrying costs,” he stressed wearily, as though fed up with such criticism. “If you say taxpayers’ money, it gives the impression that we used it to cover losses and it came from the general account of the national budget.”
Kishi said Tokyo-Mitsubishi definitely needed the money because there was a danger the bank might have fallen below the 8 percent capital-adequacy requirement set by the Bank for International Settlements. Its application for the funds was not camouflage to make it easier for weaker banks to apply, he added.
The 21 banks had to submit restructuring plans, such as branch and staff reductions, to obtain public funds, but critics say the efforts are not enough.
Tokyo-Mitsubishi plans to reduce the number of its executives from 69 to between 40 and 50 by fiscal 2000, but the average pay for full-time executives will remain at 29 million yen. However, Kishi lashed out at widespread criticism that bankers’ salaries are excessive, saying they are not as high as those at foreign financial institutions. “I hope people do not make comparisons from only one angle,” he said.
He said it would be unrealistic to halve bankers’ salaries and that workers’ rights must be protected. “In the business community, we can’t do something that would cut the link with the past,” he said, referring to the issue of salaries.
Kishi also acknowledged that banks have received special treatment from the government because of their indispensable function in financing business activity. But he appeared offended by the suggestion that banks have effectively held the economy hostage in return for government assistance, and angrily refused to comment on the issue. “It (the idea) is full of malice,” he said.
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