Asset Management One Usa Inc.

Allegations: MIZUHO FINANCIAL GROUP INC. (THE "ADVISORY AFFILIATE")'S BANKING SUBSIDIARY, MIZUHO BANK, LTD. ("MIZUHO BANK") HAD SEVERAL SYSTEM FAILURES IN 2021 WHICH CAUSED SIGNIFICANT INFLUENCES ON ITS CUSTOMERS. IN THE MEANTIME, MIZUHO BANK PLANS TO RENEW AND UPDATE ITS SYSTEMS NECESSARY FOR BUSINESS CONTINUITY (THE "SYSTEM RENEWAL PLAN"). IN CONNECTION WITH THE ABOVE, THE FSA ISSUED A BUSINESS IMPROVEMENT ORDER TO MIZUHO BANK AND THE ADVISORY AFFILIATE THEREBY ORDERING MIZUHO BANK (I) TO REEXAMINE AND REVIEW THE SYSTEM RENEWAL PLAN TAKING INTO ACCOUNT THE PAST SYSTEM FAILURES, THE NECESSITY AND URGENCY OF THE SYSTEM RENEWAL PLAN, AND POSSIBLE RISKS TO THE BANKING BUSINESS, (II) TO ENSURE APPROPRIATE CONTROLS BE PLACED IN CONNECTION WITH THE SYSTEM RENEWAL PLAN AND (III) TO SUBMIT THE RESULTS OF (I) AND (II) ABOVE. THE BUSINESS IMPROVEMENT PLAN ALSO ORDERED THE ADVISORY AFFILIATE, AS A BANK HOLDING COMPANY OF MIZUHO BANK, TO VERIFY THE RESULTS OF MIZUHO BANK'S REEXAMINATION AND REVIEW OF THE SYSTEM RENEWAL PLAN AS WELL AS A PLAN FOR APPROPRIATE CONTROLS, AND TO SUBMIT THE RESULTS OF SUCH VERIFICATION BY OCTOBER 29, 2021. Status: Final Sanction Detail: SAME AS ABOVE. Summary: THE ADVISORY AFFILIATE IS IN THE PROCESS OF REVIEWING AND VERIFYING MIZUHO BANK'S SYSTEM RENEWAL PLAN AND MANAGEMENT CONTROLS, AND PREPARING THE VERIFICATION RESULTS TO BE SUBMITTED TO THE FSA.

Allegations: THE REGULATORY ACTION IS DIRECTED TO MIZUHO BANK LTD. ("MIZUHO BANK") AND ITS PARENT COMPANY, MIZUHO FINANCIAL GROUP INC. (THE "MHFG"). PLEASE NOTE THAT MHFG IS AN "ADVISORY AFFILIATE" OF ASSET MANAGEMENT ONE USA BY VIRTUE OF BEING AN INDIRECT CONTROLLING PERSON, BUT MIZUHO BANK IS NOT AN "ADVISORY AFFILIATE". MIZUHO BANK CAUSED SYSTEM FAILURES EIGHT TIMES IN TOTAL DURING THE PERIOD FROM FEBRUARY TO SEPTEMBER 2021, WHICH SIGNIFICANTLY AFFECTED ITS INDIVIDUAL AND CORPORATE CUSTOMERS. FURTHERMORE, IN THE RESTORATION PROCESS AFTER THE SYSTEM FAILURE ON SEPTEMBER 30, A PROBLEM WAS FOUND IN RELATION TO MIZUHO BANK'S COMPLIANCE WITH LAWS AND REGULATIONS RELATED TO ASSET FREEZING AND OTHER ECONOMIC SANCTIONS AS WELL AS THE AML/CFT GUIDELINES. THE FSA FOUND THAT THE DIRECT CAUSE OF THE SERIES OF MULTIPLE SYSTEM FAILURES AS FOLLOWS: ·MIZUHO BANK HAS FAILED TO CONDUCT VERIFICATION SUFFICIENTLY FOR ENSURING QUALITY IN SYSTEM DEVELOPMENT AND RESPONSES TO FAILURES. ·MIZUHO BANK HAS NOT DEVELOPED A MAINTENANCE AND OPERATION STRUCTURE TO ENSURE STABLE OPERATION OF ITS NEW CORE SYSTEM, SUCH AS FAILING TO CORRECT PROBLEMS IN SYSTEM MAINTENANCE AND OPERATION AND TO GOVERN OUTSOURCEES SUFFICIENTLY. ·MIZUHO BANK HAS FAILED TO VERIFY ITS PREPAREDNESS FOR EMERGENCIES SUFFICIENTLY THROUGH DRILLS AND TRAINING. THE FSA FURTHER FOUND THAT MHFG FAILED TO MANAGE AND CONTROL MIZUHO BANK APPROPRIATELY AS A BANK HOLDING COMPANY AND IDENTIFIED MHFG'S GOVERNANCE RELATED ISSUES. THE FSA CONSIDERS THAT THE ROOT CAUSES OF THESE PROBLEMS IN TERMS OF SYSTEMS AND GOVERNANCE ARE AS FOLLOWS: (1)DISREGARD FOR SYSTEM-RELATED RISKS AND EXPERTISE (2)DISREGARD FOR THE ACTUAL SITUATION OF THE IT SECTION (3)LACK OF SENSITIVITY TO THE IMPACT ON CUSTOMERS AND DISREGARD FOR THE ACTUAL SITUATION OF THE SALES SECTION (4)ATTITUDE TO REFRAIN FROM SAYING WHAT NEEDS TO BE SAID AND TO ONLY DO WHAT WAS INSTRUCTED ACCORDINGLY, THE FSA HAS ORDERED MIZUHO BANK AND MHFG TO FORMULATE BUSINESS IMPROVEMENT PLANS AS FURTHER DESCRIBED IN 12.B BELOW. Status: Final Sanction Detail: SEE ABOVE. Summary: MIZUHO BANK AND MHFG WILL BE TAKING ACTIONS AS DIRECTED IN THE BUSINESS IMPROVEMENT ORDER AND PROVIDE REPORTS TO THE FSA BY THEIR RESPECTIVE DUE DATESE AS SET FORTH IN THE BUSINESS IMPROVEMENT ORDER.