Chairman's message (16 April 2014)

16 April 2014

Takeo Nakano

Chairman of the Trust Companies Association of Japan
President & CEO, Mizuho Trust & Banking Co., Ltd.

The Trust Companies Association of Japan was established in 1926 to "promote the development of trust systems and public good," and has undertaken activities that have popularized and improved the soundness of the trust system.

Until today, the trust system has continued to develop as an important element of the social and economic infrastructure in Japan, with total trust property balance reaching a record high of JPY831 trillion as of end of December 2013.

1. Contributing to the Development and Growth of the Economy and Society by Fulfilling the Trust Function

Such continued development of trusts is attributed to the characteristics of "trusts" i.e., "flexibility to create new products." We strive to use such characteristics, and fulfill the trust function to contribute to the development and growth of the economy and society.

Specifically, we shall incorporate the following two points.

The first is to fulfill the trust function for sustained growth in the Japanese economy.

New initiatives to further advance growth strategies are currently being promoted in Japan, and we hope to contribute to the growth and simulation of the Japanese economy by planning the active utilization of the trust function in areas such as refurbishing aged infrastructure, earthquake reconstruction, and renewable energy as individual assets flow from "savings to investment," which is expected to increase with the introduction of NISA in January 2014.

For example, "Educational Fund Giving Trusts," which have been managed since April 2013, have been well received in the market as products that cater to requirements. They are also expected to have effects such as improvement in consumer sentiment through the intergenerational transfer of assets. The second is to deal with the problems of society attributed to change in social and economic conditions.

Apart from the ongoing increase in the use of "Testamentary Trusts" due to factors such as Japan's low-birth rate and aging society, the scope of trusts appears to be spreading with areas such as "Testamentary Substitute Trusts" that help with smooth succession, and "Legal Guardianship Supporting Trusts" that support the management of assets for persons requiring a legal guardian.

We strive to act decisively by providing appropriate products and services to meet the needs of such changing social and economic conditions while also fulfilling the consulting function.

To achieve firm results from these initiatives, it is our intent that each of us, as bearer of trusts, shall strive to be imaginative in the development of new areas and in the enhancement of convenience, while the Trust Companies Association of Japan will actively give requests and proposals in areas such as tax and regulatory reforms.

2. Improving Confidence in Trusts

Trusts are a system for entrustment where assets are transferred to a trustee based on "confidence" in such trustee and the trustee manages and invests the assets while being required to exercise the " fiduciary duty " in good faith.

The use of the trust function is spreading in many areas, and there are increasing expectations toward it. We, as bearers of trusts, will by all means cater to such expectations in a highly specialized manner and will strive to further improve "confidence" in trusts with a contemporary view to exercise " fiduciary duty " in a more sophisticated manner.

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