At least seven of the nation’s 14 regional banks tied up with Mizuho Financial Group Inc.’s credit company, Orient Corp., will stop doing business with it due to the scandal over Orient’s loans to the underworld, according to bank officials.
Two other banks are considering following suit, their officials said.
The banks have requested that Orient improve its client screening system to make sure “anti-social” elements are not approved for loans.
Orient President Masayuki Saito said at a news conference Wednesday in Tokyo the firm is now investigating whether any employees had cozy relations with people tied to the yakuza.
Offering an apology, Saito said Orient will “do its utmost to eliminate (lending to) anti-social elements.”
Saito also said he will make his responsibility clear in light of the investigation into the company’s ties with yakuza.
The banks cutting Orient off include North Pacific Bank in Hokkaido and Nishi-Nippon City Bank in Fukuoka Prefecture.
The five that will continue to do business with Orient said they will be able to implement appropriate examinations of its operations.
The Financial Services Agency plans to conduct an inspection to see why Mizuho Bank submitted a false report about the loans, and look into whether there was any systematic coverup by the Mizuho group, an FSA official said Wednesday.
After identifying who is accountable, the FSA will consider imposing additional punishment on Mizuho Bank, the official said.
This inspection is separate from probes the FSA will launch next Tuesday on Mizuho Financial Group and the nation’s two other major banking groups, Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc., to check their legal compliance.
On Monday, a third-party panel of lawyers set up to investigate Mizuho Bank’s shady loans said it found no evidence that the bank intended to cover up the misdeeds systematically, but the FSA wants to investigate that matter itself.
The scandal broke Sept. 27 when Mizuho Bank was ordered to improve its operations following an FSA inspection, which found the bank had lent more than ¥200 million in 230 transactions, through Orient, to people tied to organized crime.
Mizuho left the matter unaddressed for more than two years.
It initially claimed top management had not been aware of the shady loans before admitting top management had known.