News Column

Mizuho FG chief vows to prevent recurrence after loan scandal

June 23, 2014

Mizuho Financial Group Inc. president pledged Tuesday to improve corporate governance, including through the establishment of oversight committees, to prevent recurrence of a scandal involving loans to members of organized crime groups.

"We will try to regain the public's trust through renewed efforts to sever ties with antisocial groups," Yasuhiro Sato, president and chief executive officer of Mizuho Financial Group, said at a shareholders' meeting in Tokyo.

"I deeply apologize for causing trouble and stirring concerns," as its core banking unit Mizuho Bank lent money to gangsters through credit company Orient Corp., and the bank and the holding company were ordered last year by the Financial Services Agency to improve businesses.

The company is planning to establish three committees, which will be in charge of nominating executives, deciding on their pay and conducting audits. More than half of the members of each committee will consist of external board members so as to oversee management and strengthen the governance structure.

Among the firm's 13 board members expected to be approved at the shareholders' meeting, six come from outside the firm. Former economic and fiscal policy minister Hiroko Ota is set to become chairwoman of the board of directors.

The scandal over shady loans to gangsters came to light in late September when the FSA ordered Mizuho Bank to improve its operations following an inspection that revealed the lender had left the matter unattended for over two years after learning of the problem.

Mizuho Bank originally claimed its top management had not been aware of the issue but later admitted management had been informed of the issue at board and compliance meetings.

In December, the FSA ordered the megabank to suspend some of its affiliated loans and demanded the bank's parent Mizuho Financial Group improve its business.

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Source: Japan Economic Newswire

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