The chief of a government-backed, loan-recovery body accused Sumitomo Bank Wednesday of pursuing its own benefits at the expense of the public interest during the first hearing of his 4.8 billion yen damages suit against the major bank.
Housing Loan Administration Corp. President Kohei Nakabo, who is suing the bank over its role in the "jusen" housing loan mess, told the Tokyo District Court he took the legal action so that banks will "realize their public responsibility as the major financial institutions in our country."
Nakabo's organization filed the suit against Sumitomo last month, seeking to make the bank liable for introducing risky borrowers to two jusen mortgage lenders, thus adding to the lenders' financial troubles.
The Housing Loan Administration was set up in 1996 to take over the bad loans left behind by seven jusen firms that went bankrupt after their huge property loans became irrecoverable.
Officials of the corporation said they have found 134 cases of bad loans at jusen lenders stemming from inappropriate behavior by banks, including 72 involving Sumitomo Bank. The lawsuit against Sumitomo is the first legal action taken by the loan-recovery body.
In the court hearing Wednesday, Nakabo blamed Sumitomo and other banks for exploiting the jusen firms "as if they were garbage boxes" by introducing borrowers to them even though they were aware of the risks involved.