Suruga Bank Extends Massive Loans to Founding Family Firms

September 4, 2018

Tokyo- Japanese regional lender Suruga Bank extended loans totaling tens of billions of yen to companies linked to its founding family, it was learned Tuesday.

The borrower companies include ones without substance that are headed by founding family members, informed sources said, adding that there is something unclear about how the loans in question have been used.

The Financial Services Agency, conducting an on-site inspection of the bank, sees many problems with the lender's corporate governance system, the sources said.

Suruga Bank provided loans for share-house and other real estate investments based on falsified loan application documents.

A third-party panel created by the bank is investigating the bank. The results of the probe will be released Friday.

Most of the founding family-linked companies are headed by family members and therefore can be considered effective subsidiaries of Suruga Bank, the sources said.

The banking law prohibits banks from extending loans to subsidiaries on better terms than granted to other companies with similar creditworthiness.

The FSA is checking whether Suruga Bank set appropriate loan terms and conducted proper screenings when providing loans to the founding family-linked companies, the sources said.

Meanwhile, Suruga Bank does not regard the founding family-linked companies as subsidiaries.

The bank has been headed by members of the Okano family since its founding in 1895. Chairman Mitsuyoshi Okano maintains his strong influence in the bank after stepping aside as president in 2016. Jiji Press