Mizuho CEO set to survive mob scandal, resume reform push
By Taiga Uranaka and Taro Fuse
TOKYO (Reuters) - The head of Mizuho Financial Group (8411.T: Quote) looks set to survive the revelation of bank loans to mobsters, a move that could revive his recently flagging efforts to improve corporate governance at Japan's second-largest bank by assets.
Mizuho will not sack Yasuhiro Sato as president and CEO, but may suspend his pay for some period, people familiar with the matter said on Friday. The bank is expected to announce its response to the scandal on Monday.
The uproar over the mob loans has sidetracked Sato over the past month from his quest to unify the fractious financial group, which lags Japan's other two "megabanks" in key measures of financial performance. It comes as Mizuho is trying to expand its loan business globally and establish itself as "Asia's core bank".
But the mob loans reflect badly on Mizuho's past governance more than on Sato's reform drive, said banking analyst Toyoki Sameshima at BNP Paribas Securities.
"The matter gives all the more reason for Sato to push forward with fixing the bank's problems," Sameshima said. "I don't think it will be a significant setback to Sato's efforts to change the bank or his leadership."
In the latest scandal involving a major Japanese company having ties with the underworld, regulators disclosed in late September that Mizuho had funneled some $2 million through an affiliated financing firm to organized crimes figures in 230 small transactions, mostly car loans.
Mizuho initially said that knowledge of the loans went only as far as the bank's compliance officers, but later the bank acknowledged that the transactions had been reported to top officials, including Sato, at board meetings.
The Financial Services Agency late last month ordered Mizuho to improve its business practices after it failed to stop the mob lending more than two years after finding out about the loans. Working with an outside panel of lawyers, Mizuho aims to submit a report to the regulator on Monday. Continued...