Mizuho Bank to get second business-improvement order

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Mizuho Bank to get second business-improvement order

A news conference with Tatsufumi Sakai, left, president of Mizuho Financial Group Inc., and Koji Fujiwara, chief executive of Mizuho Bank, took place in August after computer glitches led to the suspension of bank operations. Toshiyuki Hayashi Executives at Mizuho Financial Group Inc. and Mizuho Bank have decided to step down to take responsibility for a series of computer system glitches that rocked bank operations and hampered customer access to services.

The Financial Services Agency is poised to issue a second business-improvement order to the bank by the end of November.

Sources said when the regulator issues the order, it is expected to include instructions to clarify the management responsibility for eight separate computer glitches this year, including one incident where ATMs gobble up customer bank cards.

Mizuho officials thought that there would be no change around the resignation of Tatsufumi Sakai as president of the group and Koji Fujiwara as chief executive of Mizuho Bank.

The FSA issued a rare business-improvement order in September, while it was still in the middle of investigating the company's computer problems.

FSA officials reached a stern conclusion about what was behind the rash of glitches: management failure to recognize potential risks to the bank's computer system, inadequate oversight structure and governance issues that caused complacency and prevented leadership from emerging to fix the problems in the bank's corporate culture.

According to sources, the nominating committee of Mizuho Financial Group is expected to meet soon to decide when the actual change of executives will take place and who will replace the departing leaders.

Some within Mizuho want the change to take place next spring, after the group compiles its measures to prevent a recurrence of the computer problems after it receives the business-improvement order.

According to sources, the FSA has concluded that management must be held accountable because of the moves to reduce the number of staff handling computer system issues during its investigation.

It also revealed new suspicions of possible violations of the Foreign Exchange and Foreign Trade Control Law regarding transactions attempted when a computer glitch delayed the processing of foreign currency transactions in September.

Sakai became president of Mizuho Financial Group in April 2018, an unusual move after serving as president of Mizuho Securities Co., a group company. Sakai pushed a corporate downsizing agenda that included cutting staff and closing bank branches.

While the balance sheet improved, a series of computer glitches prompted calls within the company for Sakai to take responsibility.

Mizuho Bank has been plagued by computer problems for a long time, with major glitches occurring in 2002 and 2011. On both occasions, the FSA issued business-improvement orders. After the 2011 glitch, Satoru Nishibori took over and resigned as the Mizuho Bank president.