Business / Corporate

Panel finds ‘considerable number’ of Suruga Bank officials involved in lending irregularities

JIJI

A third-party panel set up to investigate lending irregularities at Suruga Bank said in a report Friday that a considerable number of its officials were involved in the systemic misconduct.

The panel said that the officials involved include a former managing director, and that document falsification and other irregularities were rampant in lending for real-estate investments.

“We regard this as a systemic problem,” the panel’s chair, Naoto Nakamura, told a news conference in Numazu, Shizuoka Prefecture.

In the report, the panel blamed the Numazu-based regional bank’s management for lack of due diligence.

Five executives of the bank, including Chairman Mitsuyoshi Okano, hailing from its founding family, and President Akihiro Yoneyama, resigned Friday to take responsibility for the scandal. Director Michio Arikuni was promoted to president.

The Financial Services Agency, which is conducting on-site inspections over the matter, is expected to take tough administrative action against Suruga Bank, believing that its corporate governance was insufficient.

In the report, the panel confirmed at least 795 suspected cases of manipulation of documents related to loans for share-house and other real-estate investments since 2014.

The cases, including padding of loan applicant incomes, were confirmed mainly at the bank’s branch offices in the greater Tokyo area.

Nearly 90 percent of bank officials subject to the investigation were found to have been involved in fraudulent lending operations, including many who were not active participants keeping quiet about the fraud.

Cited as causes of the scandal were factors including bank officials’ exposure to pressure to meet high performance goals and a lack of independence in loan screenings.

The late founding family member Kinosuke Okano, who served as vice president of the bank until July 2016 and acted as the bank’s effective top decision-maker, was named the person who was primarily responsible for its culture of putting placing excessive priority on sales over compliance.

“We apologize for causing great inconvenience,” Arikuni said at a separate news conference. He vowed to work for the bank’s rehabilitation while maintaining its current policy of promoting loans for individuals. He denied that the bank is eyeing partnerships with other banks or companies at the moment.

Suruga Bank is now considering setting up an internal investigation committee to look into the former management’s legal responsibility for the scandal, with a view to seeking damages.