The Financial Services Agency said Thursday that it ordered Mizuho Bank to suspend some of its "affiliated loans" for a month for doing business with organized crime.
The financial watchdog also ordered the mega-bank's parent, Mizuho Financial Group Inc., to improve operations for failing to properly oversee the bank.
Mizuho Financial Group Chairman Takashi Tsukamoto said later that he will step down to take responsibility for the scandal.
In addition, Mizuho Bank President Yasuhiro Sato will not receive any salary for a year, they said.
Mizuho Bank was ordered by the FSA in September to improve operations after failing to take substantial steps to prevent or sever ties with "antisocial forces" for over two years despite knowing it was handing out car loans to the yakuza.
The FSA decided to take additional punitive action against the bank's parent after determining it should be held responsible for failing to prevent the bank from submitting a false report to the agency.
Mizuho Bank originally claimed top management was unaware of the yakuza loans, but later admitted Sato and former President Satoru Nishibori were in a position to know about them.