Japan's financial watchdog is preparing to order the Bank of Tokyo Mitsubishi UFJ to suspend new-loan activities in the western Osaka region due to its connection with an embezzler, a report said yesterday.
The Financial Services Agency has learned that Sanwa Bank, a former major bank integrated into the new mega-banking group, had loaned money to mob-linked Kunihiko Konishi, then chairman of the Osaka-based Asukakai foundation, the Nikkei newspaper reported.
The loan balance eventually reached several billion yen, and Konishi was sentenced to six years in prison this month on charges of embezzlement, the newspaper said.
Given the gravity of a megabank's association with embezzlement and fraud, the FSA is moving to issue the partial business suspension order, the Nikkei said.
The order is likely to be limited to the Osaka region, the Nikkei said, citing a source familiar with the matter.
In a separate case, the agency is expected to slap Mitsubishi UFJ Securities Co with a business improvement order for a regulatory violation in its proprietary trading activities, the Nikkei added.
The banking group's management, including president Nobuo Kuroyanagi, plans to take temporary pay cuts as a matter of accountability, with Mitsubishi UFJ Securities considering internal penalties as well, the newspaper said.