Japan’s banking regulator will oversee system management at Mizuho Financial Group (8411.T), a rare punishment following a series of technical failures at the banking group, a source told Reuters on Wednesday.
The Financial Services Agency’s move is due to be part of administrative action against retail lender Mizuho Bank and its parent, Japan’s third-largest lender by assets, according to the source familiar with the matter. The source declined to be named as the move, expected later this month, was not yet official.
A spokesperson for Mizuho declined to comment.
The action by the FSA – one of the most decisive in recent memory – will bring the computer system of the retail arm of the Japanese banking giant under effective government control.
It comes after a series of high-profile technical meltdowns this year, including widespread outages at ATMs, that had sparked frustration among customers and undermined confidence in the lender.
The technical problems are all the more notable given that Mizuho spent more than $3.6 billion to overhaul its systems in 2019. That revamp followed two large-scale breakdowns in 2002 and 2011.
Japan’s chief cabinet secretary, Katsunobu Kato, declined to comment directly on reports of the action against Mizuho, but said banks themselves must be responsible for building systems to provide financial services.
Shares in Mizuho fell 0.8% by late morning, while the Nikkei average was flat.
A third-party report commissioned by the bank found its corporate culture was to blame for its long history of tech system failures, creating an atmosphere where managers are reluctant to express opinions and unable to respond well to crises.
The Nikkei newspaper, which first reported the FSA’s planned move, said the regulator will jointly manage the system with the bank, and order that system updates and maintenance be carried out under its control.
The management structure of the system may also be reviewed if necessary, the Nikkei said.
The regulator will determine where management responsibility lies after clarifying the cause of Mizuho’s recent technical problems, it said.