Suruga Bank has said that its documents on the screenings of loans related to investments in shared houses appear to have been manipulated or fabricated, and that quite a number of employees at the lender might have been aware of the malpractice.

The bank, which is based in the city of Numazu, Shizuoka Prefecture, showed the findings Tuesday in an outline produced by an in-house investigation into the problem.

The regional lender will set up a panel comprised of external lawyers to conduct a further probe, and hopes that third-party investigation will be completed by the summer.

Under the investment program, individual investors bought share houses using loans from Suruga Bank. Tokyo-based share house operator Smart Days Inc. rented all of them and paid the rent that had been agreed in advance to the investors.

But the company, which operated women-only share house units under the brand “Kabocha no Basha” (Pumpkin Carriage), suspended rent payments due to sluggish occupancy rates at the share houses and went bankrupt last month.

In some cases loan applicants’ annual incomes or deposit balances were adjusted to make it easier for them to pass the loan screenings, while in other cases contract documents in which the prices of share houses were overstated were produced to have applicants take out higher value loans than were actually needed, according to the outline.

Many of the share house owners are having trouble repaying their loans from the bank.

At the end of fiscal 2017, the bank’s balance of share house-related loans including lending for programs involving firms other than Smart Days totaled ¥203.59 billion, with 1,258 borrowers.

At a news conference in Numazu, Suruga Bank President Akihiro Yoneyama said, “We deeply apologize to all people concerned for causing trouble and worry.”

On his management responsibility, Yoneyama said, “I’m not considering (at the moment) whether I will resign or not.”

But the bank chief added that he plans to accept a harsh, self-imposed penalty after the results of the third-party probe as well as an ongoing on-site inspection by the Financial Services Agency become available. The FSA began its inspection last month, planning to impose an administrative penalty on the bank.

According to the outline of the internal investigation, document manipulation and fabrication were conducted at three of the bank’s branches — one in Yokohama and two in Tokyo.

Yoneyama denied that the wrongdoing was conducted systematically across the bank.

Suruga Bank also said that its fiscal 2017 group net profit plunged 50.5 percent from the previous year to ¥21.1 billion as it increased share house-related loan-loss reserves.

In a related move, the Tokyo District Court on Tuesday decided to launch liquidation procedures for Smart Days.

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