* Mizuho names VP Nobuhide Hayashi new head of core lending
* Yasuhiro Sato steps down as unit head, remains head of
* Latest management shake-up in wake of organized crime loan
(Updates with executive comments, adds context)
By Taiga Uranaka
TOKYO, Jan 23 Mizuho Financial Group Inc
said it would replace the chief executive of its core
banking unit, the latest management shake-up in Japan's
second-largest lender as it tries to repair a reputation
tarnished by loans to organised crime.
While its rivals Mitsubishi UFJ Financial Group and
Sumitomo Mitsui Financial Group aggressively expand
overseas, Mizuho is struggling with what executives called
problems with corporate governance and culture.
The lender has since last year been embroiled in a scandal
over loans that were extended to organised crime networks
through a consumer finance affiliate, prompting penalties from
Japan's banking regulator including a one-month suspension for
some Mizuho Bank operations.
"I have come to have a view that there are still many
problems in corporate governance and culture," Yasuhiro Sato,
the outgoing chief executive of Mizuho Bank told reporters on
"Why is this happening only to Mizuho? There are some
structural issues. We have not yet firmly established one Mizuho
culture," he added.
Created about a decade ago by a merger of three rival banks,
Mizuho has been criticised by investors for having too many
executives and staff who remain loyal to their former employers
rather than the merged entity.
Financial industry sources say turf wars are common in the
bank, and rival camps often avoid interacting with each other.
Sato said his decision to step down would allow him to focus
on revamping the corporate culture. He will be replaced by
Nobuhide Hayashi, a 56-year-old deputy president of Mizuho
Financial Group, effective April 1, the bank said.
Sato will remain president of Mizuho Financial Group, the
parent entity, which also owns a securities firm and a trust
bank. Hayashi, who also oversees Mizuho's international banking
unit, spent several years in New York and Hong Kong.
"It is not easy to rebuild a brand," Hayashi said.
Mizuho has previously said it would reshape the board by
inviting more outsiders, who will have the biggest say in
nominating executives and at compensation committees. The change
will be put to shareholders at a meeting scheduled for June.
Japan's banking regulator had said that Mizhuo had known
since 2010 that, through partially-owned consumer lending
company Orient Corp, the bank had extended more than $2 million
in loans to people deemed affiliated with organized crime. The
regulator also said Mizuho had failed to take action against
The bank had said Mizuho Financial Group Chairman Takashi
Tsukamoto will quit in March to take responsibility for the
The loans scandal is the latest problem facing Mizuho. The
bank was hit by two massive crashes at its computer system, the
latest occurring in the immediate aftermath of the March 2011
earthquake and tsunami.
(Reporting by Taiga Uranaka; Additional reporting by Shinichi
Saoshiro and Nathan Layne; Editing by Chang-Ran Kim and Miral