Administrative penalties against Dai-Ichi Kangyo Bank and Nomura Securities Co. for their payoffs to a “sokaiya” corporate extortionist take effect August 6.
Under the punitive measures drawn up by the Finance Ministry last week, DKB will be forbidden to open new offices or operate in new business areas, such as setting up a financial holding company, until Aug. 5, 1998. The bank is also prohibited from extending loans, except some consumer loans such as for housing, to new customers at all domestic branches. In addition, DKB is banned from underwriting and bidding for Japanese public bonds until the end of the calendar year.
The nation’s top brokerage was meanwhile ordered to refrain from making stock-related transactions on its own account and underwriting and bidding for Japanese public bonds until the end of December. The first corporate division of Nomura’s head office was told to suspend brokerage transactions in securities until Dec. 5. The same suspension order holds for the remaining divisions of the head office until Sept. 5. In addition, stock-related transactions at all Nomura offices were to be suspended for one week beginning August 6.
On August 5, Finance Minister Hiroshi Mitsuzuka told a news conference the scandal was very regrettable and that he expects both firms to take steps to prevent the misdeeds from reoccurring and to make every effort to win back the public’s trust. “I also hope this will be an opportunity for all financial institutions to renew their awareness of their responsibility to society and review their operations,” he said.