UFJ Holdings Inc, Japan’s fourth-largest lender by assets, faces criminal charges after it sought to hide the extent of its bad loans from regulators, reported China Daily on Friday.
The Financial Services Agency said on June 18 Osaka-based UFJ, which has 4.62 trillion yen (US$42 billion) of bad loans, systematically hid, forged and distorted documents to avoid inspections. UFJ admitted the charges in July. The agency passed details of its probe to the Tokyo district public prosecutor’s office and recommended charges be brought, Tatsuya Ito, Minister for Financial Services, said.
The recommendation is the latest setback for UFJ after the bank was forced to seek a 700 billion yen (US$6.36 billion) rescue from Mitsubishi Tokyo Financial Group Inc last month to help write off bad loans.
Shares of the bank gained 8 per cent since the bailout after falling 14 per cent in the three months after the agency’s report.
“There are concerns that some companies will stop doing business with UFJ,” said Yoshio Shima, director of credit research at Deutsche Securities Ltd in Tokyo. “Still, the market has factored in the possibility of charges in its share price and there is a consensus the impact will be small.”
UFJ, the only one of Japan’s biggest banks to forecast a fourth consecutive annual loss this year, sought the funds from Mitsubishi Tokyo ahead of a merger within a year. Officials from UFJ were not available for comment.
Ito declined to comment on reports UFJ Bank Ltd will be forced to halt some business in Japan’s two largest cities.
UFJ’s main commercial banking unit may be ordered to stop advancing loans to new corporate customers in Tokyo and Osaka, the Nihon Keizai newspaper said.
“I want UFJ to strengthen governance under its new management,” Ito said in Tokyo.
Regulators asked prosecutors to file criminal charges against UFJ Bank and some individuals it did not identify.
UFJ, which posted a third consecutive loss for the year ending March 31, last month reversed its profit forecast for the 12 months to March 31, 2005 to a loss of 670 billion yen (US$6.09 billion). It reported a loss of 91.6 billion yen (US$832.7 million) in the three months to June 30 as bad loans jumped to more than a 10th of total lending.
Shares of UFJ fell 2 per cent to 489,000 yen (US$4,445) in Tokyo. Mitsubishi Tokyo’s shares declined 1.2 per cent to 957,000 yen (US$8,700).
