Mizuho Bank has outstanding loans to yakuza and other antisocial elements apart from car loans extended through its affiliate credit company, Orient Corp., President Yasuhiro Sato told the Diet on Wednesday.

Giving unsworn testimony before the Lower House Financial Affairs Committee, Sato said that while the bank has a database in place that prevents it from making new loans to mobsters, there are loans that made it through the screening process that existed at the time they were made and were later discovered to have dubious recipients.

He refused to elaborate on the amount of money involved or the number of such dealings, saying it is a “delicate matter.”

“We do have, in addition to the (so-called) tie-up loans (with Orient), dealings that we later judged through new tips as mob-linked, or borrowers who later added dubious individuals as directors,” Sato said.

His testimony, followed by a similar admission by Sumitomo Mitsui Banking Corp. President Takeshi Kunibe, who was also called to give unsworn testimony, shows the financial sector has a long way to go before severing its long-held ties with the mob.

Kunibe, who is also chairman of the Japanese Bankers Association, likewise declined comment on the scale of mob-linked loans held by Sumitomo Mitsui, saying the information is “very sensitive.”

Later in the day, Finance Minister Taro Aso, who is also financial services minister, told the committee that the banks can possibly have their mob-linked loans bought up by the government-backed Deposit Insurance Corporation of Japan.

Under a scheme legislated in 2011, financial institutions can sell mob-linked credit to the DIC — though at a huge discount. The DIC would then ask Resolution and Collection Corp. to deal with the mobsters.

But Kensho Sasaki, a Lower House lawmaker from the Japanese Communist Party, said Mizuho’s recent moves to have Orient cover its dubious lending has made use of the DIC difficult.

“The (subrogation of Mizuho’s mob-linked loans by Orient) means that the bank itself has become clean, but this is far from a fundamental solution,” Sasaki said while quizzing Aso.

“It merely means the claims have shifted from Mizuho to Orient,” Sasaki continued. “And it leaves the question of what to do with loans held by Orient. As it is, the DIC scheme cannot be applied to loans held by (nonbank lender) Orient. It has actually made the problem worse.”

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