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

The scheme designed to lend public funds to small and mid-sized companies hurt by the 2008 global financial crisis

The head of a government-backed Japanese bank said today 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 today.

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 per cent government-funded.

The claims "shake trust in the organisation 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.