In a rare move, the Japanese regulator will oversee the struggling Mizuho IT system – source

A pedestrian is reflected in a sign showing the logo of Japanese group Mizuho Financial Group Inc in front of the bank’s headquarters in Tokyo, Japan on May 15, 2015. REUTERS / Yuya Shino

  • The FSA will oversee the IT system – source
  • Technical issues persisted despite the overhaul
  • Mizuho shares down 0.8%

TOKYO, Sept. 22 (Reuters) – The Japanese banking regulator will oversee the management of the Mizuho Financial Group (8411.T) system, a rare punishment following a series of technical failures by the banking group, a source told Reuters on Wednesday.

The Financial Services Agency’s decision is expected to be part of an administrative action against retail lender Mizuho Bank and its parent company, Japan’s third-largest lender in terms of assets, according to the source familiar with the matter. The source declined to be named because the decision, expected later this month, was not yet official.

A spokesperson for Mizuho declined to comment.

The FSA’s action – one of the most decisive in recent memory – will put the IT system of the retail arm of the Japanese banking giant under effective government control.

It comes after a series of high-profile technical collapses this year, including widespread ATM outages, which sparked customer frustration and undermined confidence in the lender.

The technical issues are all the more notable as Mizuho spent more than $ 3.6 billion to overhaul its systems in 2019. This overhaul follows two large-scale outages in 2002 and 2011.

Japanese Chief Cabinet Secretary Katsunobu Kato declined to comment directly on reports of the action against Mizuho, ​​but said banks themselves must be responsible for creating systems to provide services. financial.

Mizuho shares fell 0.8% late in the morning, while the Nikkei average was flat.

A third-party report commissioned by the bank found that its corporate culture was to blame for its long history of technology system failures, creating an atmosphere in which managers are reluctant to voice their opinions and unable to respond well to crises. Read more

The Nikkei newspaper, which first reported the FSA’s decision, said the regulator would jointly manage the system with the bank and order system updates and maintenance to be carried out under its control.

The system’s management structure can also be revised if necessary, the Nikkei said.

The regulator will determine where management responsibility lies after clarifying the cause of Mizuho’s recent technical issues, he said.

Reporting by Yuki Nitta and David Dolan; Writing by Ritsuko Ando; Editing by Stephen Coates

Our standards: Thomson Reuters Trust Principles.

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