Mizuho Financial Group said a former top executive knew it was lending to crime groups three years ago, reversing its stance that only compliance officials were aware and drawing further ire from the financial regulator.
Bloomberg reports that Satoru Nishibori, president of Mizuho’s banking unit at the time, knew of the loans in 2010, President Yasuhiro Sato said at a news briefing in Tokyo Tuesday. The Financial Services Agency, which last month ordered Mizuho to improve its business, said it was 'extremely regrettable' that the bank gave incorrect information. Shares of the bank fell as much as 3.4% to 199 yen in Tokyo.
The admission underscores the ties between yakuza gangs and the Japanese financial industry six years after the Financial Services Agency punished Mitsubishi UFJ Financial Group for doing business with the groups for decades. Sato apologized, saying he bears responsibility even though he was only made aware of the loans in March during the FSA’s probe.
'The bank’s reputation risk just got bigger with this report correction', said Shinichi Ina, an analyst at UBS in Tokyo. 'This problem may harm the good reputation that Sato created' since he became president in 2011.
The FSA will take appropriate action after Mizuho and an independent panel commissioned by the bank complete investigations, the agency said in a faxed statement.
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