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The Yomiuri Shimbun The building housing the Financial Services Agency is seen in Chiyoda Ward, Tokyo.
By Yasuhiro Kobayashi and Hideki Suzuki / Yomiuri Shimbun Staff Writers
14:20 JST, September 23, 2021
The Financial Services Agency will step up its monitoring of Mizuho Bank’s systems, effectively putting them under agency control, following a series of glitches and a lack of significant improvement.
“We’re very concerned about the succession of problems as it relates to the stability of financial systems,” a senior agency official said Tuesday regarding the troubles at Mizuho Bank, Ltd., a group company of Mizuho Financial Group, Inc.
The agency decided to take control because the repeated problems could spread anxiety among Mizuho’s customers and ultimately have a negative impact on other financial institutions as well. It told Mizuho Bank to submit an update plan for its central system, called Minori, by the end of this year, including specific details.
The agency aims to nip future issues in the bud, by closely monitoring what is needed and what is lacking, as well as the progress made on improvements.
A business improvement order is usually issued to inform a financial institution of the matters that need to be fixed, leaving the institution to actually implement the necessary measures. However, the agency decided to put the bank under its close eye, so as to strongly encourage Mizuho to resolve the situation.
Complicated systems
The focus now will be on how much the agency can get involved with the specific elements of Mizuho’s systems.
Other megabanks entrust the operation of their central systems to a single company, but the operation of Mizuho’s systems involves four companies, including three that had close relationships with the banks that were consolidated into Mizuho Bank.
The four companies involved are Fujitsu Ltd., which had a relationship with Dai-Ichi Kangyo Bank; IBM Japan, Ltd., which was linked to Fuji Bank; Hitachi, Ltd. which had ties with the Industrial Bank of Japan; and NTT Data Corp.
Although the agency has been actively hiring people who are well versed in the systems of financial institutions, some have voiced concerns. One mid-ranking agency official said, “I’m not sure how many people can understand their complicated systems.”
Mizuho Bank was forced to suspend several million transactions in 2002 and over a million in 2011. Learning from these experiences, the bank has segmented its systems to prevent a single failure from causing further malfunctions. This may be one reason behind the frequent occurrence of small-scale failures.
Sense of urgency
The FSA’s strict approach to Mizuho Bank reflects its sense of urgency. Should system glitches continue to occur at the bank, public criticism could turn to the agency as the supervisory authority.
It has been more than six months since the agency started inspecting the Mizuho systems, following failures in February and March. “We may have missed something, as we’d been preoccupied with specifics,” said a senior agency official.
“The latest measure allows the Financial Services Agency to confirm the progress [of Mizuho systems updates] and thus ensure effectiveness,” said Toyo University Prof. Hironari Nozaki. “It’s an unprecedented response, but the situation is that serious.”
