Previously, the Japanese financial regulatory department issued a business improvement order to Mitsubishi UFJ Financial Group for its violation of exchanging customer information, and imposed penalties. On Friday, Mitsubishi UFJ declared that it would implement salary reductions for 21 executives, including the group CEO and chairman, in order to rebuild customer trust and confidence in the company.
On July 19th, Fx678 carried a report editor Marlann suggesting that Japan's largest bank group, Mitsubishi UFJ Financial Group Co., Ltd., was found to have violated firewall rules last month and exchanged customer information at least 26 times to win business improperly.
As a result, the Japanese Financial Services Agency issued a so-called business improvement order to Mitsubishi UFJ Bank and its joint ventures Morgan Stanley MUFG and Mitsubishi UFJ Morgan Stanley.
On Friday, Mitsubishi UFJ Financial Group issued a statement saying that its CEO, Hironori Kamezawa, would take a 30% pay cut for three months as punishment, and Chairman Kanetsugu Mike will receive a 30% reduction in pay for five months. The CEO of the flagship banking department, Junichi Hanzawa, and the head of the primary brokerage department, Makoto Kobayashi, will also receive pay cuts. According to statistics, 21 executives, including retired executives, will be subject to salary reductions or give up some of their compensation to assume responsibility for violating customer confidentiality regulations.
In addition, the company's flagship banking department CEO, Junichi Hanzawa, and the head of the primary brokerage department, Makoto Kobayashi, will also receive pay cuts. According to statistics, 21 executives, including retired executives, will be subject to salary reductions or give up some of their compensation to assume responsibility for violating customer confidentiality regulations.
The Japanese financial regulatory authorities have already imposed penalties on the group and its joint ventures. The salary cuts for high-level executives are largely to regain customer trust, and since the incident broke out, many corporate customers of Mitsubishi UFJ have transferred their bond underwriting business to competing institutions.
Salary cut policy
As expected, Kamezawa bowed along with other executives at a press conference to apologize. But bending over and over again can't help but make people feel that there is a sense of absurdity in not learning from mistakes.
The so-called firewall rules have long been a 'thorn in the eye' for Mitsubishi UFJ, which has been lobbying authorities, along with other banks, to relax regulations to make it easier to provide services and products across departments for its customers.
After being severely punished by regulatory authorities, Mitsubishi UFJ stated that executives and employees did not fully realize that they needed to comply with the rules governing cooperation between commercial banks and brokerage departments.
The company stated that it will review its procedures, strengthen training and monitoring, change employee performance evaluation methods, and has submitted a list of improvement measures to regulatory authorities.
Coincidentally, SMBC Nikko Securities, a subsidiary of Japan's second-largest bank group, Sumitomo Mitsui Financial Group, was also exposed in 2022 for market manipulation. At that time, SMBC Nikko's CEO announced a six-month pay cut to win back customers who had shifted their business elsewhere. This move proved effective in the end.
The collective salary cuts for Mitsubishi UFJ executives may have taken a cue from SMBC Nikko, but can this trick really improve Japan's banking industry, or Japanese companies, to improve their self-inspection and self-management systems?