Mizuho Financial Group Inc.’s Chief Executive Officer Yasuhiro Sato will step down as head of the lending arm of Japan’s third-biggest bank following a regulatory probe into loans to crime groups.
Nobuhide Hayashi will replace Sato as CEO of the Mizuho Bank Ltd. unit on April 1, the Tokyo-based company said in a statement today. Sato will remain CEO of the parent company. Hayashi is currently deputy president of the banking arm.
Japanese regulators last month ordered a second round of penalties against Mizuho after it failed to stop 200 million yen ($1.9 million) in credit extended to members of criminal syndicates and then filed an incorrect report on the matter.
The management change comes less than a week after Sato, 61, told reporters that he wouldn’t step down. He said at a briefing today that this was because he had yet to ask Hayashi to take over or seek approval from directors. He also said he has no plan to resign as group CEO.
“I was determined to lead Mizuho until we saw the affiliate-loan issue to the end,” said Sato, referring to the submission of a second business improvement plan to the Financial Services Agency on Jan. 17. “I started considering resigning from the bank around October or November as my responsibilities mounted at the holding company.”
The FSA ordered Mizuho to submit the plan on Dec. 26 and told it to suspend new transactions through its consumer credit affiliates for a month. That same day, Mizuho said Chairman Takashi Tsukamoto will step down in March.
Hayashi, 56, became deputy president of the company’s corporate banking unit in April last year, three months before it merged with the retail lending arm to form Mizuho Bank.
The crime-lending issue came to light in September, when the FSA told Mizuho to strengthen compliance as a remedy for neglecting to act on the loans, which it made through its Orient Corp. consumer-finance affiliate. The probe deepened after Mizuho acknowledged that it erred in saying top executives weren’t aware of the transactions.
Sato said in October that he was in a position to have found out about the loans as early as July 2011, when reports mentioning them were circulated at executive meetings. He apologized, saying that while he didn’t know of the credit until the FSA briefed the bank on its investigation, he bears responsibility.