Mizuho top pay slashed as bank tries to draw line under gangster scandal

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Mizuho Financial Group, Japan’s second-biggest lender by assets, has tried draw a line under a Japanese mafia scandal by cutting the pay of senior managers and scaling back the power of its .
Mizuho has been under fire since the end of September, when said more than Y200m ($2m) of loans from a consumer-finance affiliate had found way “antisocial forces”, including Yakuza gangsters, without the knowledge of senior managers, prompting a rebuke from the Financial Agency.
The scandal deepened after Mizuho admitted that executives including Yasuhiro Sato, group president, received documents disclosing the problem more than two years earlier.
Mr Sato told a Tokyo news briefing yesterday that he would forgo pay for six months take for the affair. Takashi Tsukamoto, group , has agreed to do the same and will also quit role as of the group’s main lending unit, Mizuho Bank. Another 52 current and former executives will be subject to salary cuts or clawbacks, the bank said.
The scandal has awakened fears that a push to crack down on crime syndicates is being thwarted by lax standards in Japan’s financial institutions.
The announcement of the penalties for executives came as Mizuho submitted a proposal to the FSA on how planned to tighten governance standards.
Earlier in the day, an panel commissioned by Mizuho to investigate the loans reported that the bank “lacked awareness” of the importance of severing ties with criminal gangs. attributed much of the problem to a lack of communication over several years between disparate units.
The bank’s disclosures at the end of September, which appeared to exonerate senior managers, were “hasty” and “ill-researched”, the panel added.
In early October, Mizuho acknowledged that some managers, including Satoru Nishibori, former head of the banking unit, knew of the problem loans in 2010.
Mr Sato also said he was “in a ” to know about the problem as early as July 2011, citing materials distributed – but not discussed – at a board . The panel’s supported this version of events, saying there was no evidence that issues relating to the loans were brought at compliance and board member meetings attended by Mr Sato, or Mr Tsukamoto.
Mizuho Financial Group had assets of Y175tn at the end of June, ranking as the world’s 15th biggest bank.
Shares in the group rose by 2.5 per cent on in Tokyo, just beating the broader market.