Mizuho CEO to step down after system failures, reports say

[TOKYO] Mizuho Financial Group chief executive officer (CEO) Tatsufumi Sakai is planning to step down following multiple technical failures that drew criticism from the government, according to local media reports.

Nikkei, Kyodo and NHK all reported that the CEO is likely to step down, without saying where they got the information. Mizuho spokesman Yasuhiro Sasaki said nothing has been decided on any management changes.

Mizuho's management has come under increasing pressure from outages that disrupted services for customers this year. Sakai, who became CEO in 2018, has been trying to reshape the bank, which has long criticised for a bloated cost structure and internal division stemming from a merger of 3 rival lenders 20 years ago.

Japan's Financial Services Agency is preparing another business improvement order for the bank tied to the glitches, a person with knowledge of the matter said.

The FSA issued such an order in September requiring the bank to review system upgrades. The regulator was expected to take more administrative action after finishing a probe into Mizuho that began earlier this year.

Shares of Mizuho dropped as much as 2.4 per cent on Friday (Nov 19) morning in Tokyo, paring this year's gain to 11 per cent. The stock has underperformed larger rivals Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group this year, as the lenders recover from the pandemic by reducing provisions for bad loans.

The government is also looking into potential violation of rules on overseas remittances at the time of 1 of the 8 system troubles Mizuho suffered this year, according to Nikkei.

Delays stemming from the glitches led the bank to skip necessary processes to check the transactions, the newspaper reported.

Mizuho's handling of the system failures indicate that it still has unsolved issues on governance and corporate culture, FSA officials have said. The regulator has been interviewing dozens of senior Mizuho officials as part of its months-long inspection on the bank.

In 1 glitch in August, all 460 Mizuho Bank branches nationwide were unable to process transactions for about an hour. The Tokyo-based bank said backup hardware failed when the servers connecting the branches broke down.

"We have caused troubles for customers repeatedly, and it could lead to customer anxiety in doing transactions with us," Sakai said at the time. "We are taking it very gravely."

In February, ATMs swallowed more than 5,000 cash cards and passbooks, and a month later a hardware failure caused a delay in 300 foreign-currency money transfers.

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