Japan bank CEO quits over claims of $2.2 bn in bad loans

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The head of a government-backed Japanese bank said Wednesday he would quit in response to an internal probe that found wide-ranging misconduct involving some $2.2 billion in shady loans. The report alleged that hundreds of employees at almost all of Shoko Chukin Bank’s offices across Japan falsified documents to make low-interest loans to firms ineligible to receive them.

The scheme was designed to lend public funds to small and mid-sized companies hurt by the 2008 global financial crisis and Japan’s 2011 quake-tsunami disaster. In all, the Tokyo-based bank made some 260 billion ($2.2 billion) in dodgy loans, according to the report, which it made public on Wednesday. Bank president Kenyu Adachi, a former high ranking industry ministry official, said he would step aside “at the appropriate time”.

The private bank is about 80 percent government-funded. The claims “shake trust in the organization to its core”, Adachi told a press briefing. “Top management has the biggest responsibility and I want to take that responsibility as the company’s most senior executive.” Public broadcaster NHK said that Adachi will forgo his salary for six months a common act of contrition among Japanese executives.

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