TOKYO, Oct 3 (Reuters) - Japan’s financial regulator will order Suruga Bank to halt some operations in the wake of improper lending on property investments, two people with direct knowledge of the matter said on Wednesday.
The Financial Services Agency (FSA) has determined that improper lending was widespread and governance functions had failed at the regional bank, the two people told Reuters on condition of anonymity as the order has not been announced.
Following onsite probes ending in late September, the FSA in coming days will order Suruga to stop extending new loans for property investment and to improve its governance, the sources said.
An FSA spokesman declined to comment. Suruga could not immediately be reached for comment outside business hours.
Suruga’s chairman and president resigned last month after a third-party panel found the problems to be systemic. They were taking responsibility for loans the lender, based in Shizuoka prefecture in central Japan, made to retail investors who built “share houses,” where tenants share bathrooms and other facilities.
The bank’s stock has fallen about 80 percent since the loan problems began to surface in August 2017. (Reporting by Takahiko Wada; editing by William Mallard and G Crosse)