Wednesday, October 9, 2013
EDITORIAL: Change At Mizuho Bank Must Come From Within
TOKYO (Nikkei)--Mizuho Bank has revealed that former President Satoru Nishibori and other executives were aware that loans were being extended to gangsters, contradicting the bank's earlier stance that top management knew nothing about the payments.
The sudden about-face, made at a press conference Tuesday, underscores the sloppiness with which Mizuho is handling the matter. The news is unsettling because public trust is a bank's most important asset.
Mizuho also revealed at the press conference that the bank continued extending loans to members of organized crime groups through an affiliated consumer credit company even after the legal compliance committee and board of directors received reports about such deals.
Given that Nishibori and subsequent chief executives Takashi Tsukamoto and Yasuhiro Sato overlooked the problem, much of the blame lies squarely on their shoulders.
Mizuho has set up a third-party panel of legal experts to uncover the whole truth. Sato, the current president, said he will resign from all public positions, including his role as a private-sector member of the Council for Industrial Competitiveness, to focus all his energy on cleaning up the mess at Mizuho.
So Many Questions
The bank should answer at least two questions: Why did Mizuho officials not understand that doing business with members of organized crime groups is strictly forbidden, and why did they present inaccurate reports in response to a Financial Services Agency probe?
These are just two of many questions the bank needs to address, and Mizuho's clients, depositors and shareholders have every right to be nervous. The bank should prove to society that it is ready and willing to tackle the problem by answering such questions and severely punishing those responsible.
The loans in question were extended to a consumer credit company that provided gang members with funds to buy automobiles after examining their applications. Leaving the screening process to another party -- rather than the bank doing the checks itself -- leaves a lot more room for the money to wind up in the wrong hands.
Other financial institutions have also forged similar lending alliances, and the loans being provided under these arrangements have expanded to include sectors other than just automobiles. In light of the troubles at Mizuho, these companies should take a close look at how to better contain the risks involved.
(The Nikkei, Oct. 9 morning edition)