Nov. 13 (Bloomberg) -- Mizuho Financial Group Inc. President Yasuhiro Sato, grilled by lawmakers over the Japanese bank’s loans to crime groups, acknowledged that its punishments of officials were viewed as “light.”
“I know there are harsh opinions regarding punishments for executives including myself,” Sato told the lower house financial affairs committee in Tokyo today. “Taking them on board and making efforts to end transactions with antisocial groups is my current responsibility.”
Mizuho said last month that it will cut pay for officials including Sato and Chairman Takashi Tsukamoto for failing to stop 200 million yen ($2 million) in loans made to gangsters. The Financial Services Agency, which ordered Mizuho to bolster compliance in September, is examining the bank’s business improvement plan filed last month before taking any more action.
The regulator also began conducting fresh inspections of Mizuho, Japan’s third-largest bank by market value, this month along with its bigger rivals Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc.
Sato, in his first Diet testimony on the issue, said Mizuho has other loans to crime groups than the type that regulators have been examining, which were made through the Tokyo-based bank’s Orient Corp. consumer-credit affiliate.
Mizuho uses a database on criminal organizations to screen potential customers and ensure that people associated with the groups don’t make contracts, Sato said. “However, there are cases where borrowers become identified with such groups once the database is updated,” he said. “Once we find out such loans, we try to cancel them.”
Sumitomo Mitsui’s banking unit chief, Takeshi Kunibe, made similar remarks at the same session, saying there are borrowers at his bank that aren’t initially known to be members of antisocial groups. Once they are identified later, the Tokyo-based lender makes efforts to cancels the debts, he said.
Sato and Kunibe declined to give the number of loan cases or amounts.
Kunibe, who is chairman of the Japanese Bankers Association, said the lobby group will develop additional measures to combat crime syndicates this month, including a revision of its code of conduct and ways to prevent gangsters from making loan contracts with banks.
The association is working with the police to share databases on gangs and considering exchanging more information with consumer-credit firms, he said last month.
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