Mizuho’s top execs to resign after govt punishments over system failures

Reuters

November 26, 2021

TOKYO (Reuters) — Mizuho Financial Group said on Friday its chief and three other executives will resign as the group received punishments from financial authorities over a series of embarrassing technical system failures at Japan’s No. 3 lender.

Group CEO Tatsufumi Sakai, as well as the head of the main banking unit and executives in charge of the group’s systems and compliance, will step down in April to take responsibility for the glitches, it said.

The announcement came after the Finance Ministry and banking regulator separately reprimanded Mizuho earlier in the day.

The Finance Ministry ordered the bank to take corrective measures for a breach of the country’s foreign exchange law. During one of the system failures, the bank failed to comply with anti-money laundering procedures necessary for overseas remittances.

The ministry cited a lack of knowledge by Mizuho’s executives of foreign exchange law, a lack of communications among sections concerned and fragility of system management as reasons for the censure.

The breach was an embarrassment for Japan as it is beefing up efforts against money-laundering through a three-year action plan that included tighter supervision of financial institutions. The plan was implemented in response to a report by the Financial Action Task Force (FATF), a global financial crimes watchdog.

The punishment from the Financial Services Agency was for Mizuho’s eight system glitches that took place this year, despite a $3.6 billion overhaul of its systems in 2019.

The FSA cited governance problems at Mizuho, including an underestimation of the risks related to its banking systems and insufficient attention given to on-site conditions and a culture in which employees “do not say what should be said.”

Finance Minister Shunichi Suzuki urged Mizuho to hold a “sense of crisis” over the system glitches, and to prevent a recurrence.