The presidents of Mizuho Financial Group Inc., one of Japan’s major banking groups, and its banking unit Mizuho Bank will step down to take responsibility for a series of system failures, sources familiar with the matter said Friday.
The resignation of Mizuho Financial President Tatsufumi Sakai and Mizuho Bank President Koji Fujiwara comes as the Financial Services Agency plans to issue an additional business improvement order for the two companies by the end of November.
The sources also said the Finance Ministry is considering ordering a review of the bank’s operations over suspected violation of the Foreign Exchange and Foreign Trade Control Law in September.
The banking group company has started the process to choose Sakai’s successor with the aim of finalizing the pick by the end of this year, though the timing could be pushed back to around next spring if the current top management opts to implement thorough preventive measures before handing over leadership, according to the sources.
Mizuho Bank, one of Japan’s megabanks with branch offices across the country, experienced system glitches eight times this year, affecting automated teller machines and causing other problems.
Regarding the Sept. 30 system glitch, which caused delays in some of its money transfers for foreign exchange trades, the Finance Ministry believes Mizuho Bank failed to take necessary steps to prevent money laundering before foreign currency remittances, the sources said.
The Financial Services Agency is expected to notify Mizuho Bank of its findings in the near future, following the investigation of the series of system issues.
The agency’s view is that the glitches have stemmed from mismanagement by inexperienced operators, as the system itself appears to have no major problems, sources close to the matter said.
Although Mizuho Bank drew up preventive measures in June after experiencing four system glitches, the bank has since been hit by such problems an additional four times.
In June, Mizuho Bank announced remuneration cuts ranging from 10% to 50% for Sakai and 10 other executives as a way to take responsibility for the glitches.
Shortly before the pay cuts were announced, Fujiwara was expected to resign, but the bank put off the decision to replace him in hopes of seeing progress with the preventive steps.
Mizuho’s handling of the system failures indicate that it still has unsolved issues on governance and corporate culture, agency officials have said. The regulator has been interviewing dozens of senior Mizuho officials as part of its monthslong inspection on the bank.
In one glitch in August, all 460 Mizuho Bank branches nationwide were unable to process transactions for about an hour. The Tokyo-based bank said backup hardware failed when the servers connecting the branches broke down.
“We have caused troubles for customers repeatedly, and it could lead to customer anxiety in doing transactions with us,” Sakai said at the time. “We are taking it very gravely.”
In February, ATMs swallowed more than 5,000 cash cards and passbooks, and a month later a hardware failure caused a delay in 300 foreign-currency money transfers.
Sakai, who became CEO in 2018, has been trying to reshape the bank, which has long been criticized for a bloated cost structure and internal division stemming from the merger.
Sakai refrained from becoming chairman of the Japanese Bankers Association on April 1 to focus on addressing the system glitches. The position is normally rotated annually among the nation’s three biggest banks.
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