Japan’s Banking Regulator to Oversee System Management of Mizuho Financial Group
Japan's banking regulator will oversee system management at Mizuho Financial Group, making it a one-of-a-kind case of direct intervention following a series of technical failures.
The move by the Financial Services Agency will be part of administrative action against the retail Mizuho Bank and its parent and is intended to bring the computer system of the retail arm of the Japanese banking group under effective government control.
The reason for intervention comes in light of Mizuho facing a series of technical issues this year, including widespread outages at ATMs, that undermined confidence in the lender among its customers. In getting involved, however, FSA also faces its share of risk.
"The FSA's involvement in Mizuho means if the banking group faces a similar incident again, the FSA would also be blamed for it. That means the FSA is going to take certain risks in taking these measures," said Nana Otsuki - chief analyst at brokerage Monex IncOtsuki.
A third-party report found that Mizuho’s corporate culture was likely to blame for its long history of tech system failures, creating an atmosphere where managers are reluctant to express opinions and unable to respond to crises.
The Nikkei newspaper 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 move-in overseeing practices is expected later this month and is yet to become official. Shares in Mizuho already fell 1.2% on Wednesday in light of source news.
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