Jiji PressTOKYO (Jiji Press) — The Financial Services Agency plans to order a partial business suspension to Suruga Bank as early as this week for its real estate loan irregularities, informed sources have said.
The agency sees dysfunctional governance at the regional bank, based in Numazu, Shizuoka Prefecture, as the lender’s management team was unaware of the irregularities, according to the sources.
The business suspension, which may last several months, is believed to mainly cover the bank’s real estate loan operations, the sources said.
According to a report by a third-party investigative panel, manipulations of documents and contracts related to loans for share-house and other real estate investments were rampant at Suruga Bank.
Officials involved included a former senior managing executive officer, the report also said.
The panel said the bank’s management team did not fulfill its fiduciary duty, pointing to its failure to recognize and prevent the misconducts.
The balance of Suruga Bank’s loans provided for real estate-related investments stood at ¥1.9 trillion at the end of March, about 60 percent of its total lending. The bank has stopped extending new real estate-related loans voluntarily.
The agency is conducting on-site inspections of the bank from April.
Last month, Suruga Bank was found to have extended loans totaling tens of billions of yen to companies linked to its founding family.
The loan scandal has led five executives of the bank, including Chairman Mitsuyoshi Okano, a founding family member, and President Akihiro Yoneyama, to resign from their posts.