The government's Tohoku Local Finance Bureau on Thursday issued a business improvement order to regional credit cooperative Iwaki Shinkumi Bank, partly for covering up fraudulent loans for many years.

According to the bureau, former executives of the cooperative, including a former chairman, concealed for a long time fraudulent corporate loans, including through the accounts of depositors opened without their consent.

The practice is believed to have started in 2004 or even earlier, according to the bureau and the Financial Services Agency.

In addition, the lender, based in Iwaki, Fukushima Prefecture, let a former employee who committed embezzlement continue working as usual without taking disciplinary action. The employee later committed further embezzlement.

The bureau said that corporate governance did not function due to the massive influence held by the former chairman.

The bureau requested that Iwaki Shinkumi Bank submit a business improvement plan by June 30. It also ordered the cooperative to revise a special business plan drawn up in exchange for a public funds injection in 2012.

On Thursday, Iwaki Shinkumi Bank said that its leader, Yohachi Honda, and other executives will resign to take responsibility. The lender had disclosed its misconducts in November 2024.