(Bloomberg) -- Mizuho Financial Group Inc. Chief Executive Officer Tatsufumi Sakai is planning to step down following multiple technical failures that drew criticism from the government, according to a person with knowledge of the matter.
Most Read from Bloomberg
Startup Fever Is Gripping the World's Last Big Untapped Nation
A Denser City, But at What Cost?
An Oil Company Went Up in Flames, Burning Lenders and the Planet
Hong Kong's New Museum Tries to Please Art World - and Beijing
Elizabeth Holmes Faces Last-Ditch Chance to Testify at Trial
The person asked not to be identified because the matter is private. Nikkei, Kyodo and NHK all reported earlier that the CEO is likely to step down, without saying where they got the information. Mizuho spokesman Yasuhiro Sasaki said nothing has been decided on any management changes.
Tokyo-based Mizuho has been dogged by major IT troubles since it was created from the merger of three banks more than 20 years ago. Its retail arm has had seven system failures since February. Similar outages happened in 2002 and 2011, causing delays in millions of transactions and prompting Japan's Financial Services Agency to issue business improvement orders.
Mizuho's management has come under increasing pressure from outages that disrupted services for customers this year. Sakai, who became CEO in 2018, has been trying to reshape the bank, which has long been criticized for a bloated cost structure and internal division stemming from the merger.
Sakai refrained from becoming chairman of the Japanese Bankers Association on April 1 to focus on addressing the system glitches. The position is normally rotated annually among the nation's three biggest banks.
In June, Mizuho said its top executives would take pay cuts after a panel found that management lapses contributed to the ATM failures. Sakai's salary was reduced for six months.
The FSA is preparing another business improvement order for the bank tied to the glitches, a person with knowledge of the matter said. The FSA issued such an order in September requiring the bank to review system upgrades. The regulator was expected to take more administrative action after finishing a probe into Mizuho that began earlier this year.
Shares of Mizuho dropped as much as 2.4% on Friday morning in Tokyo, paring this year's gain to 11%. The stock has underperformed larger rivals Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. this year, as the lenders recover from the pandemic by reducing provisions for bad loans.
The government is also looking into potential violation of rules on overseas remittances at the time of one of the eight system troubles Mizuho suffered this year, according to Nikkei. Delays stemming from the glitches led the bank to skip necessary processes to check the transactions, the newspaper reported.
Mizuho's handling of the system failures indicate that it still has unsolved issues on governance and corporate culture, FSA officials have said. The regulator has been interviewing dozens of senior Mizuho officials as part of its months-long inspection on the bank.
In one glitch in August, all 460 Mizuho Bank branches nationwide were unable to process transactions for about an hour. The Tokyo-based bank said backup hardware failed when the servers connecting the branches broke down.
"We have caused troubles for customers repeatedly, and it could lead to customer anxiety in doing transactions with us," Sakai said at the time. "We are taking it very gravely."
In February, ATMs swallowed more than 5,000 cash cards and passbooks, and a month later a hardware failure caused a delay in 300 foreign-currency money transfers.
(Recasts lead, adds detail in third, fifth and sixth paragraphs.)
Most Read from Bloomberg Businessweek
How Child Care Became the Most Broken Business in America
Boeing Built an Unsafe Plane, and Blamed the Pilots When It Crashed
First Task for the Teamsters' Next Boss: Take On UPS
Google Wants to Save the Planet With Satellite Images
Generation Lockdown: Where Youth Unemployment Has Surged
©2021 Bloomberg L.P.