A third-party investigative panel found that Suruga Bank Ltd.'s top executives breached due diligence obligations after it linked widespread employee misconduct to a failed loan investment scheme, Tokyo's The Nikkei reported Sept. 8.
According to an independent report by the panel, executives were indifferent to some bank employees' practice of approving improper loan applications to meet quotas. In some cases, employees approved loans using forged documents to verify an applicant's income. The report said the behavior was "systemic" and led to some loan approvals for investors in a failed home sharing investment scheme.
Meanwhile, Suruga Bank President Akihiro Yoneyama and Chairman Mitsuyoshi Okano, along with three other executives, stepped down Sept. 7 amid the lending scandal at the bank.
Michio Arikuni, the bank's newly appointed president, said the regional lender expects additional losses from loans lent out to investors in the failed investment scheme. The bank is conducting a self-assessment for the end-of-September earnings report and may raise loss allowances if needed, Arikuni added.