Photo/Illutration Koji Fujiwara, chief executive of Mizuho Bank, holds a news conference in Tokyo in June. (Asahi Shimbun file photo)

Mizuho Bank and Mizuho Financial Group, its holding company, were slapped with a business improvement order from the Financial Services Agency on Nov. 26 for the eight computer system glitches that plagued the bank this year.

The FSA pointed out in its order that “Mizuho damaged the trust of Japan’s payment system and its management bears a heavy responsibility for it.”

After Mizuho started to fully operate its Minori core system, in which it invested 400 billion yen ($3.5 billion), an executive with little experience was put in charge of the systems department and personnel in the department were reduced by 60 percent.

The FSA believes that management neglected its responsibility to be prepared to prevent system glitches from occurring and asked the bank to take drastic countermeasures.

The order, the second issued for the megabank this year, is based on the Banking Law.

On top of that, the Finance Ministry also ordered corrective actions the same day for the bank’s inappropriate response to foreign remittances made about two months ago when the bank was suffering from computer problems.

The ministry issued the order based on the Foreign Exchange and Foreign Trade Control Law, the first time it has issued one since the revised law came into effect in 1998.

The megabank is expected to face serious questions about its governance of its computer systems.

On Sept. 30, Mizuho experienced equipment problems when it sought to check whether recipients of the foreign remittances in question were listed on sanction blacklists that include terrorists, according to sources.

After the issues occurred, Mizuho skipped part of the pre-screening procedures required by the same law so it could transfer funds as soon as possible.

The bank checked the information after the money was transferred, but the law does not permit that. The Finance Ministry was investigating the case on suspicion that the bank might have violated the law.

Mizuho Bank’s compliance department was unaware that such an action could violate the law, according to sources.

Remittances to those on the sanction lists were not confirmed.

But the Finance Ministry is believed to have judged that Mizuho’s inappropriate oversight action is a major problem given that it is a megabank playing a key role in the financial system.

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