Mizuho to punish bank executives over loans to gangsters

Scandal taints group president Yasuhiro Sato.

Mizuho Financial Group Inc. indicated it might cut pay for top executives to placate investors, regulators and lawmakers after failing to stop loans to crime groups such as the yakuza.

Japanese media reported that Mizuho plans to punish more than 30 executives at Mizuho Bank Ltd., including Group President Yasuhiro Sato, whose compensation will be suspended for half a year.

Sato has become the center of the brewing firestorm following reports of senior management knowledge of the gangster loans. Sato’s credibility took a hit when the bank reversed its position that senior managers weren’t aware of the loans.

Analysts said one issue that could become a problem for Mizuho is the question of when senior management, including Sato, knew about these loans. They noted it might be hard for Sato to survive if it becomes clear that he was in a position to know about them and did nothing.

Mizuho made 230 transactions, mostly loans for automobiles, through its Orient Corporation consumer credit affiliate, said the government. Mizuho said at least four of its senior executives responsible for compliance knew of the loans but didn’t inform superiors.

Four days later, Mizuho said top managers were aware of the transactions, contradicting the earlier remarks.