Mizuho said its president and CEO, Yasuhiro Sato, would keep his job but have his pay suspended for six months. While that should allow him to resume his efforts to unify the fractious so-called megabank and improve its governance, Mizuho faces an uphill battle in catching up with its expanding peers.
“It’s extremely regrettable that we failed to do enough to eliminate transactions with anti-social forces,” Sato told a news conference, using a common euphemism for organised crime. “I would like to apologise from the bottom of my heart for causing confusion.”
The external panel of lawyers hired by Mizuho said in a report that Mizuho’s management was lax in its handling of the loans to gangsters, but did not intentionally mislead regulators with an initial false report on the extent of the problem.
“We can say there is no possibility” of a cover-up by the bank, said panel leader Hideki Nakagome, announcing the results of the three-week investigation.
Finance minister Taro Aso withheld judgment on the report and Mizuho’s response, but people familiar with the matter have said the Japanese Financial Services Agency, which Aso heads, was unlikely to impose further penalties on the bank as the panel did not find intentional evasion.
But Mizuho is not off the hook yet. While the bank wants to move beyond the scandal, some members of parliament have called for Sato to testify on the affair and, people familiar with the matter say the FSA is under pressure to appear tough, as questions arise over why it did not uncover the shady loans earlier.
The FSA last month ordered Mizuho to improve business practices after the bank did almost nothing about the mob lending for more than two years.