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The government unofficially decided Friday to reappoint Masaharu Hino as head of the Financial Supervisory Agency and Hideichiro Hamanaka as his deputy when the agency becomes larger on July 1, an FSA official said.

Hino, a former senior prosecutor, became the first FSA commissioner when the agency was set up in June 1998 to take over the inspection role of the Finance Ministry.

Hamanaka, a former Finance Ministry official, has served as the deputy commissioner since its inception. The two appointments will be approved by the Cabinet on June 30.

The agency will incorporate the policy-planning authority of the Finance Ministry and will be renamed the Financial Services Agency.

With the reorganization, the FSA will increase its inspectors from 249 to 319. The reinforcement is designed to cope with the increasing number of foreign institutions operating in Japan and credit unions formerly supervised by prefectural governments.

The FSA intends to maintain its personnel policy that senior officials who come from the Finance Ministry will never return to the ministry, the official said. This policy is meant to secure neutrality for the agency because of strong public criticism of the ministry’s arbitrary management style.

Meanwhile, Finance Minister Kiichi Miyazawa has tapped Toshiro Muto, head of the powerful Budget Bureau, as vice minister, a ministry official said.

Muto’s appointment as the ministry’s top bureaucrat will come as it prepares for the planned realignment of government ministries and agencies in January 2001.

Budget bureau chiefs have traditionally been appointed vice ministers, but this rule was broken last year because of the scandal involving the organization’s then head. Muto himself was demoted in 1998 for his supervisory responsibility for the ministry-wide wining and dining scandal involving financial institutions.

Haruhiko Kuroda, vice minister for international affairs, and his deputy, Takatoshi Ito, a former Hitotsubashi University professor, will remain in their posts.

Directorship of the budget bureau will be given to Masakazu Hayashi, head of the Secretariat.

These appointments will also be approved by the Cabinet on June 30.