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Mizuho Financial Group Inc. President Tatsufumi Sakai, left, and Mizuho Bank President Koji Fujiwara attend a press conference after the publication of a third-party committee’s investigation report, in Chiyoda Ward, Tokyo, on June 15. Mizuho Financial Group Inc. President Tatsufumi Sakai, left, and Mizuho Bank President Koji Fujiwara attend a press conference after the publication of a third-party committee’s investigation report, in Chiyoda Ward, Tokyo, on June 15.
The Yomiuri Shimbun
11:24 JST, June 21, 2021
The Financial Services Agency aims to issue a business improvement order to Mizuho Financial Group, Inc., possibly within this month, over the computer system failures it suffered in February and March.
Although Mizuho Financial Group has already cut the salaries of 11 executives, including President and CEO Tatsufumi Sakai, 61, the FSA will make its own judgment about the group’s management systems and management responsibility.
Pay halved for months
In the wake of the latest system failures, the FSA conducted on-the-spot inspections into the Mizuho group companies, and repeatedly held direct hearings with senior executives.
The Mizuho group also experienced large-scale system malfunctions in 2002 and 2011. The FSA aims to find the fundamental causes that have led to the repeated problems and urge the group to improve the situation.
Concerning the most recent malfunctions, a third-party committee comprising outside experts publicized its investigation report on June 15. The report pointed out the management’s low sensitivity to risks.
After the release of the report, the Mizuho group announced the penalties to cut the executives’ salaries. Sakai’s salary was halved for six months, while that of Mizuho Bank President Koji Fujiwara, 59, was halved for four months.
The Mizuho group thus indicated its recognition that Sakai bore a heavier responsibility.
Management system issues
What the Mizuho group did not announce was any determination about the other executives. It seems that the group will make a judgment on the issue based on the FSA’s action.
Regarding the management lineup from now on, the Mizuho group is considering a plan in which Sakai will stay in his post and Fujiwara will step down, not taking the post of the bank’s chairman. It has been a custom at the bank that those who serve as president next take the post of chairman.
At a press conference on June 15, Sakai said, “After watching the start of measures to prevent a recurrence of such malfunctions, we shall make necessary personnel affairs decisions.”
Mizuho Financial Group’s business performance has been relatively stable. In its annual consolidated business result in fiscal 2020, the group’s net profit increased 5% from the previous business year to about ¥471 billion.
A senior executive of the Mizuho group said: “The business performance itself has been good. It is natural that President Sakai should stay in his post.”
However, Mizuho Financial Group has been the entity responsible for compiling a basic plan for building a new core system, and it played the leading role in measures taken after the 2011 system malfunction.
Mizuho Financial Group has an information technology strategy promotion committee, which decides IT investment programs and policies to operate its computer systems, and Sakai has been at the helm of the risk management aspect.
The third-party committee pointed out in its report that the group’s “weakness in IT management is deep-rooted in the corporate culture.”
A senior official of the FSA said: “Both Mizuho Financial Group and Mizuho Bank are responsible for the series of troubles. If officials of the group think that they can make the issue end only by making somebody take responsibility, it will be difficult to thoroughly implement measures to prevent recurrences.”
Lacking collaboration
At the time of Mizuho Bank’s large-scale system failure in 2002, special advisers of the board who were formerly respective presidents of three predecessor banks — Dai-Ichi Kangyo Bank, Fuji Bank and the Industrial Bank of Japan — resigned.
On the other hand, top management officials, including Terunobu Maeda, then president of Mizuho Holdings, Inc. who was from Fuji Bank, stayed in their posts. Industry sources said the decision was aimed to prevent executives of the three predecessor banks from having escalated power battles over who would succeed the posts.
In the wake of the 2011 large-scale malfunction, then Mizuho Bank President Satoru Nishibori, who was from Fuji Bank, resigned to take responsibility.
Takashi Tsukamoto, then the president of Mizuho Financial Group who was from Dai-Ichi Kangyo Bank, was transferred to the post of Mizuho Bank president, and Yasuhiro Sato, then the president of Mizuho Corporate Bank who was from the Industrial Bank of Japan, concurrently served as the president of Mizuho Financial Group.
The reshuffle was aimed at discontinuing personnel assignments based on consideration to executives from the three predecessor banks, and to make the group companies more united.
As a factor of failing to prevent the third large-scale system failure, the third-party committee’s report pointed out that Mizuho group departments tasked with system management lacked collaboration.
Can the Mizuho group eliminate the perception gap still remaining inside it? And can the group create an outcome that will contribute to avoiding a recurrence of the same kind of trouble?
The Mizuho group faces a heavy responsibility to overcome this issue.
