The Financial Services Agency will weigh additional penalties against Mizuho Bank after it explains later this month its failure to reveal executives’ involvement in loans to underworld groups, officials of the watchdog said.
Mizuho, one of the nation’s biggest banks, may face criminal prosecution if its latest report to the agency, to be submitted by Oct. 28, shows it earlier obstructed authorities by intentionally concealing documents.
The bank has been ordered to compile a second report after admitting Tuesday that its top executives had been alerted to the shady transactions with yakuza syndicates and other “anti-social” groups. In its first report, Mizuho stated only that an executive in charge of legal compliance had knowledge of the problem.
The FSA on Sept. 27 ordered Mizuho to improve operations based on its failure to deal with the shady loans.
The financial industry watchdog is poised to dish out additional administrative penalties — possibly an order to suspend operations — if Mizuho’s upcoming report reveals new evidence of mismanagement. However, no further action may be taken if the matter is attributed solely to negligence, a senior FSA official said.
The agency itself has come under fire, with critics alleging its inspection of Mizuho that began in December was insufficient. According to Mizuho President Yasuhiro Sato, the FSA at the time did not require that the bank submit documents on underworld-related loans that had been presented to its board.
“If Sato’s account is true, the FSA should also examine whether its inspection was performed appropriately,” said a source in the banking industry.