TOKYO (Reuters) - Mizuho Financial Group (>> Mizuho Financial Group, Inc.) chairman Takashi Tsukamoto will quit in March to take responsibility for a scandal over loans to organised crime, and the bank will restructure its board to improve governance, it said on Thursday.

Japan's banking regulator issued a second business-improvement order to the country's second-largest lender on Thursday due to its inaction and false reporting over loans it has extended to organised crime members.

"We need to sweep away our silo mentality and change our corporate culture," Mizuho President Yasuhiro Sato told a news conference.

The bank said Sato will give up his pay for 12 months starting from last month, up from six months initially announced in October.

Asked whether he also intended to step down, Sato said: "It is my responsibility to build a corporate governance system that is held in high regard in global financial markets."

Mizuho said it will introduce board committees made up of outside directors, and will also pick an outsider to chair its board. It will propose these changes to shareholders when they meet in June, it said.

The Financial Services Agency ordered Mizuho earlier in the day to suspend some lending business with consumer credit companies from January 20 to February 19. It admonished the bank for management and organisational failures that led to the problems.

The regulators conducted a rare second round of investigations at Mizuho after the bank acknowledged giving the authorities false information on how it handled the loan problem.

The FSA issued a business improvement order to Mizuho in late September for failing to take action for two years after learning that some of its loans had been made to "anti-social forces", a euphemism for organised crime.

The 230 small transactions totalling about $2 million, mostly made up of car loans, were made by Mizuho consumer-finance affiliate Orient Corp (>> Orient Corporation) and were among bulk loans the bank later bought from Orient.

(Additional reporting by Noriyuki Hirata; Editing by Shinichi Saoshiro and Hugh Lawson)

By Taiga Uranaka

Stocks treated in this article : Orient Corporation, Mizuho Financial Group, Inc.
Valeurs citées dans l'article : Orient Corporation, Mizuho Financial Group, Inc.