Mizuho bosses may take pay cuts after loans extended to criminal groups

Mizuho Financial Group may cut pay and add new board members to mollify investors, lawmakers and regulators after failing to end loans to crime groups in the biggest scandal of president Yasuhiro Sato's two-year tenure.

Sato, who said earlier this month that the bank's initial report to regulators was inaccurate, would explain to the Financial Services Agency on Monday how it would improve compliance, company spokeswoman Masako Shiono said yesterday.

Japan's third-biggest bank by market value would probably offer remedies including pay reductions for top executives, said Yoshinobu Yamada, an analyst at Deutsche Bank.

Mizuho shares have lost about 8 per cent since the regulator on September 27 told it to strengthen internal controls after failing to break off the more than 200 million yen (HK$16 million) of transactions with criminal organisations.

Sato's leadership was rocked less than two weeks later when the bank reversed its stance that senior managers were not aware of the loans.

"One issue that could become a problem for Mizuho is the question of when senior management, including Sato, knew about these loans," said David Marshall, an analyst at CreditSights in Singapore.

"It may be hard for him to survive if it becomes clear that he was in a position to know about them and did nothing."