The Finance Ministry said June 18 that it would exclude Dai-Ichi Kangyo Bank from participating in the bidding and underwriting of government bonds for an indefinite period of time beginning with the next bond issue, which is expected sometime early next week.

Dai-Ichi Kangyo is currently embroiled in a major scandal involving illegal loans to a “sokaiya” corporate racketeer. Ministry officials said the bank is an inappropriate choice for handling government bonds.

They cited the arrest of several former executives and the acknowledgment by the bank that the whole organization was in part involved in the fiasco. The officials said the bank’s exclusion would continue until formal administrative punishment is taken, and that it would also apply to the bidding and underwriting of government-guaranteed bonds.

It is the first time a bank has been forbidden to bid or underwrite government bonds. Last month, the ministry took a similar move against Nomura Securities Co., which allegedly offered illegal compensation to the same sokaiya.

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