Japan’s Mizuho Bank will punish more than 30 executives over revelations that the lender made loans to underworld figures, reports said yesterday, in the latest chapter of a headline-grabbing scandal.
The unit of Mizuho Financial Group, Japan’s third-biggest bank, has drafted punishments ranging from pay cuts to demotions to atone for the shady business dealings, the leading Nikkei Shimbun and Jiji Press news agency said.
Mizuho faces a deadline on Monday to submit to the Japan’s Financial Services Agency (FSA) plans for improving its lending business, along with any further information uncovered by investigators appointed by the bank.
The bank declined to comment, saying “we have not made any decisions on this matter,” as Tokyo police reportedly probe its links with Yakuza crime syndicates.
The group’s Tokyo-listed shares were down 1.44 percent to ￥204 yesterday.
The lender has been under fire since it emerged that Mizuho had processed hundreds of transactions worth about ￥200 million (US$2 million) for what regulators described as “anti-social forces,” a common term for Japan’s mobsters.
The reports yesterday said Mizuho Bank chairman Takashi Tsukamoto would step down from his post, but stay on as head of the parent company, according to Jiji.
Mizuho Financial Group chief executive Yasuhiro Sato — who has acknowledged he knew about the loans — would work without pay for six months, the reports said.
Other managers would also see pay cuts while a compliance executive would be booted from the bank’s board, they added.
The FSA last month admonished Mizuho for taking “no substantial steps” in dealing with the issue after it was first discovered two years ago, and pointed to “serious problems” with its compliance monitoring.
The bank issued an apology earlier this month for “any concern or inconvenience’’ to customers and shareholders over the FSA’s order to improve its joint loan business with its consumer finance unit, Orient Corp.
The loans in question, mostly auto loans, were made through Orient, which has pledged to end them.
The bank initially said its top executives did not know about the payments, but Sato later admitted he and others had been apprised of the dubious dealings with members of Japan’s underworld.
The bank chief added that he would not be stepping down from his role at the helm of the huge financial group.
Sato’s admission came as it emerged Mizuho was turning down an award it had been given for its record on transparency.
Like the Italian mafia or Chinese triads, the yakuza engages in activities ranging from gambling, drugs, and prostitution to loan sharking, protection rackets, white-collar crime and business conducted through front companies.
The gangs, which themselves are not illegal, have historically been tolerated by the authorities.
Additional reporting by AP