FSA inspects Suruga Bank over dubious loan scandal

Jiji Press TOKYO (Jiji Press) — The Financial Services Agency on Friday started an on-site inspection of regional lender Suruga Bank over lending irregularities related to housing investment.

At issue are loans that the bank extended to owners of women-only shared houses for investment run under the “Kabocha no Basha” (Pumpkin Carriage) brand by Tokyo-based Smart Days Inc., which has effectively gone bankrupt.

There are about 700 Kabocha no Basha housing unit owners, and most of them borrowed from Suruga Bank, based in Numazu, Shizuoka Prefecture, to acquire the units.

Smart Days leased back the units it had sold to investors, guaranteeing part of the rents expected from the property.

But the company stopped making the guaranteed payments to owners in January due to sluggish occupancy rates, leaving many owners unable to repay loans they took out to buy their shared housing units.

Suruga Bank is suspected of falsifying loan-related documents to make it easier for applicants hoping to buy Kabocha no Basha units to pass loan screenings.

Suruga Bank had drawn attention because its interest margin exceeded 2 percent, about double the levels at other regional banks, in an industry struggling due to protracted superlow interest rates.Speech

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