Mizuho FG to set up oversight committees after loan scandal

Mizuho Financial Group Inc. said Friday it will set up independent committees to oversee its management in an effort to enhance corporate governance following its core banking unit's involvement in loans to gangsters.

The major financial group and its banking arm, Mizuho Bank, submitted a business improvement plan to the Financial Services Agency, pledging to enhance risk management and compliance.

The same day, the Ministry of Economy, Trade and Industry issued a business improvement order to consumer credit company Orient Corp., through which Mizuho Bank extended shady loans.

In December, the financial watchdog ordered the Mizuho Financial Group to upgrade its business improvement plan submitted in late October, and ordered Mizuho Bank halt its loan business via credit firms for a month.

Mizuho Bank President Yasuhiro Sato said at a press conference in Tokyo, "By implementing the improvement plan, we will work to regain trust from our customers, investors and society and fulfill our social responsibility by breaking off ties with antisocial forces."

Sato, who also doubles as chief executive officer of Mizuho Financial Group, added that the company aims to make its management transparent by setting up the committees, which will consist of external board members and have power over personnel appointments and executive compensation.

In the latest plan, the bank and the parent company also said they will strengthen personnel training by inviting external experts to raise awareness of employees to stay away from shady deals.

The scandal came to light in late September when the Financial Services Agency ordered Mizuho Bank to improve its operations after the bank left the matter unattended for over two years after learning of the problem.

The bank and the holding company have admitted to lending more than 200 million yen to gangsters through Orient, mostly in the form of auto loans.

The industry ministry urged Orient to compile measures to prevent recurrences, such as bolstering its screening to exclude so-called antisocial forces from transactions and enhancing awareness among its employees.

The ministry, which supervises the consumer credit industry, handed a written reprimand to the top management of the company and ordered it to report its business improvement measures by Feb. 17.

The business improvement order was issued because the ministry "took seriously the company's failure to take (necessary) steps although it was aware that its transactions highly likely involved ones with antisocial forces," a ministry official said.

In October, Mizuho Bank took internal disciplinary action against 54 current and former executives, mostly with pay cuts and waivers. Last month, Mizuho Financial Group announced its Chairman Takashi Tsukamoto will step down from his post on March 31 to take responsibility for failing to properly manage the bank.