Suruga Bank probe reveals extent of loan misconduct

The Yomiuri Shimbun

Suruga Bank President Akihiro Yoneyama, right, bows at a press conference in apology for the bank’s loan misconduct in Numazu, Shizuoka Prefecture, on Tuesday.

Jiji PressNUMAZU, Shizuoka (Jiji Press) — Suruga Bank said Tuesday that its documents on the screenings of loans related to share house investment have been manipulated or fabricated, and that quite a number of employees of the lender might have been aware of the misconduct.

The bank, based in the city of Numazu, Shizuoka Prefecture, showed the findings in an outline of its in-house probe on the problem.

The regional lender will set up a panel comprising outside lawyers to conduct a further probe. It hopes that the third-party investigation will be completed by summer this year.

In the investment scheme, individual investors bought share houses using loans from Suruga Bank. Tokyo-based share house operator Smart Days Inc. rented all of them and paid rents promised in advance to the owners.

But the company, the operator of women-only share house units called “Kabocha no Basha” (Pumpkin Carriage), suspended rent payments due to the sluggish occupancy rates at the share houses and went bankrupt last month.

Many of the share house owners are having trouble repaying their loans from the bank.

At the March 31 end of fiscal 2017, the bank’s balance of share house-related loans, including lending for programs involving firms other than Smart Days, totaled ¥203,587 million, with the number of loan recipients coming to 1,258.

At a press conference in Numazu, Suruga Bank President Akihiro Yoneyama said, “We deeply apologize to all people concerned for causing trouble and worries.”

On his management responsibility, Yoneyama said, “I’m not considering [at the moment] whether I will resign or not.”

But the bank chief added that he plans to take tough action against himself after the results of the third-party probe and an ongoing on-site inspection by the Financial Services Agency become available. The FSA began its inspection last month, planning to impose an administrative penalty on the bank.

According to the outline of the internal investigation, the document manipulation and fabrication were conducted at three of the bank’s branches — one in Yokohama and two in Tokyo.

Yoneyama denied that the wrongdoing was conducted systematically across the bank.

In some cases, loan applicants’ annual incomes or deposit balances were padded to make it easier for them to pass the loan screenings, while in other cases, contract documents in which the prices of share houses were overstated were produced to have applicants take out more loans than actually needed, according to the outline.

Suruga Bank also said that its fiscal 2017 group net profit plunged 50.5 percent from the previous year to ¥21,065 million as it increased share house-related loan-loss reserves.

In a related move, the Tokyo District Court on Tuesday decided on the launch of liquidation procedures for Smart Days.Speech

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