Top firm could lose CEO, cut pay over big scandal

The Titanic

There's nothing like a big scandal.

Mizuho Financial Group may cut pay and add new board members to mollify investors, lawmakers and regulators after failing to end loans to crime groups in the biggest scandal of President Yasuhiro Sato’s two-year tenure.

Bloomberg reports that Sato, who said earlier this month that the bank’s initial report to regulators was inaccurate, will explain to the Financial Services Agency on 28th October how it will improve compliance.

The bank will probably offer remedies including pay reductions for top executives, said Yoshinobu Yamada, an analyst at Deutsche Bank in Tokyo.

Mizuho shares have lost 8.1% since the regulator on 27th September told it to strengthen internal controls after failing to break off the more than $2m of transactions with criminal organizations. Sato’s leadership was rocked less than two weeks later when the bank reversed its stance that senior managers weren’t aware of the loans.

'One issue that could become a problem for Mizuho is the question of when senior management, including Mr. Sato, knew about these loans', said David Marshall, an analyst at CreditSights in Singapore. 'It may be hard for him to survive if it becomes clear that he was in a position to know about them and did nothing'.

The company plans to punish more than 30 executives at Mizuho Bank including Sato, whose compensation will be suspended for half a year, the Nikkei newspaper reported Friday, without attribution. Takashi Tsukamoto will step down as chairman of the unit while keeping the post for the parent company, the newspaper said.

To access the complete Bloomberg article hit the link below

Mizuho Set to Punish Bank Executives Over Crime-Group Loans

JPMorgan Said to See Possible Accord on Madoff Scheme

Ex-Bankers Following Swiss Gain Traction Advising Asian Rich

Register for Financial Markets News Alerts