Yukio Okonogi, former president of the defunct Kokumin Bank, was sentenced Friday to 2 1/2 years in prison for aggravated breach of trust by granting up to 9 billion yen in illegal loans.
The Tokyo District Court also sentenced Hideyuki Suzuki, former deputy head of the bank, for conspiring with Okonogi, 69, in the scheme to a suspended two-year term.
Prosecutors had demanded a four-year term for Okonogi and three years for Suzuki, 68. Suzuki's term was suspended for four years.
Okonogi had pleaded not guilty, insisting the loans were legal as they were meant to avert damage to the bank by preventing a client company from going bankrupt.
According to the court, Okonogi and Suzuki gave a total of 9.05 billion yen in loans with virtually no collateral on 20 occasions between 1997 and 1998 to Kamiparesu, a company based in Mitaka, western Tokyo, that operates karaoke facilities, knowing the company could not repay the loans.
The bank was established in 1953 as a mutual savings and loan bank and was converted to a commercial bank in 1989.
After the collapse of the bubble economy, the bank's business condition worsened and it collapsed with more than 100 billion yen in bad loans in April 1999. The business was taken over by the Tokyo-based Yachiyo Bank.