Message from the Chairman of the Board of Directors

Izumi Kobayashi Outside director (Chairman of the Board of Directors) Mizuho Financial Group

Introduction

Beginning from February 2021, Mizuho Bank suffered a series of IT system failures in Japan. I sincerely apologize for the significant inconvenience this caused our customers and society. As a financial institution responsible for payment infrastructure, Mizuho must ensure such an incident does not ever occur again. It is important that both the business execution line and supervisory line maintain efforts to steadily implement and entrench the business improvement plan formulated in January 2022. Even beyond the completion of the plan, it is important that the lines fulfill every aspect of their respective roles.

Towards stronger performance of supervisory functions

Following the series of system failures, we received a variety of feedback from our shareholders and other stakeholders concerning matters including the Board of Directors’ performance of its functions. At the Board of Directors, we have been giving serious consideration to how we can perform our supervisory functions at a higher level and account for the assorted risks inherent in the Mizuho group’s wide-ranging business activities. Our outside directors, in particular, have been leading discussions on future initiatives. We recognize that the system failures exposed weaknesses in Mizuho’s capacity for mounting a coordinated organizational response to a crisis situation, implementing IT system controls, and being attentive to customers’ situations. Even with a number of rules and frameworks fully in place, the frontline personnel responsible for applying them may not adequately grasp the aims of management, the circumstances behind the rules being implemented, and other underlying principles. Similarly, frontline offices may not have adequate personnel to meet the requirements of the rules and frameworks, and employees may be unable to engage in the organization-wide communication necessary for coordinating a unified response. In these areas, there is a need for us to make improvements to our response capabilities, to our management’s tracking and understanding of actual frontline conditions, and to our management’s depth of monitoring. The business improvement plan consolidates measures to improve both business execution and supervision based on such a perspective.

By itself, the Board of Directors at Mizuho Financial Group, the holding company, cannot realistically stay apprised of everything happening across such an enormous financial group. Complete performance of supervisory functions group wide will require the Board of Directors and Audit & Supervisory Committee at not just Mizuho Financial Group but also at each subsidiary—each entity—to carry out their roles to a higher standard and enhance coordination with one another. We have already begun many initiatives in this regard. One example was the appointment of Mr. Masatsugu Shimono, Honorary Advisor to IBM Japan, and Mr. Kyoichiro Uenishi, Executive Advisor to Oriental Land, to the Board of Directors at Mizuho Bank in April 2022. Their appointments will serve to reinforce our supervisory functions for IT systems, the frontlines, and customers. Initiatives have also been moving forward at the Board of Directors of Mizuho Financial Group. These have included interviews with the heads of core group companies, most notably the President & CEO of Mizuho Bank, and with the executive officers who lead each business line. They have also included dialogues with the employees responsible for key operations on the frontlines, such as IT and sales, and discussions with outside directors at each entity. Through such initiatives, we are elevating our awareness of the state of management at each group company in relation to actual frontline conditions, as well as our awareness of latent risks. In this way, we are furthering the performance of our supervisory functions.

Expectations for Mizuho under President & Group CEO Kihara

In February 2022, Masahiro Kihara was appointed as the new President & Group CEO. The Nominating Committee was made up of outside directors, including myself. We selected Mr. Kihara because we expected he would be able to motivate employees and guide the organization through its current challenges. Indeed, since his appointment he has been vigorously leading the group forward. Notably, he has been engaging employees in direct dialogue and back-and-forth discussion, both by visiting frontline offices in person and by holding online meetings. I feel he is going above and beyond to gain an understanding of stakeholders’ views, and his approach is already gaining traction across management as a whole. In these rapidly changing, uncertain times, it is critical for Mizuho to become a company that makes the most of employees’ individuality and diversity. We had already recognized the importance of ensuring such values, and under the new leadership we have been pursuing their adoption at an even greater pace. For example, over the last two years we have been hiring talent from outside Mizuho for executive officer and management positions in the digital marketing side of our retail business and in our IT & Systems Group. In fiscal 2022, we have built on this further by hiring highly specialized and experienced talent from outside Mizuho for positions in human resources and compliance. Drawing out and bringing together the capabilities of long-time Mizuho employees is certainly necessary. At the same time, integrating diverse experience and insight is essential to making an organization stronger. The Board of Directors has been taking this up as a topic of discussion. HR should enable employees to contribute to the overall organization by being their full selves, and we have embarked on multiple initiatives aiming to institute such an approach. Among these have been revisions to the HR framework so that it covers all five core group companies.

In the course of our discussions, I have been impressed by the determination of Group CEO Kihara and the other members of management. They are proactively bringing in outside insight and striving to turn Mizuho into a company where employees can have a real feeling of their own growth and reach their full potential, regardless of career stage or nationality. Of course, these changes will not take root in the organization right away. However, I am confident that, one by one, each of our initiatives will come together to form a better direction for our corporate culture.

Looking ahead

Societal values and outlooks will continue to change rapidly, and Mizuho must overcome a number of obstacles to move forward into the future. We have received a range of related feedback from investors and analysts. While there has naturally been a focus on stable operations, the feedback has also covered the design of our future growth strategy, initiatives to responsibly address social issues such as sustainability, acceleration of digital transformation in response to rising digitalization, and efforts to transform our corporate culture as a foundation for the rest of our business. Confronting these issues is one of the core duties of the Board of Directors. The outside directors, including myself, are well aware of the gravity of the situation, and have been continually holding discussions with reference to the series of incidents from fiscal 2021. We believe we have a very significant role in, and responsibility for, the future of Mizuho. We will steadily advance the business improvement plan and carefully supervise its progress. Beyond that, we will regularly reflect on Mizuho’s purpose and hold constructive discussions with management on forward-looking strategy. In doing so, we will endeavor to restore the Mizuho group’s reputation as an indispensable presence for our customers, society, and the economy so that we can grow alongside all of our stakeholders.

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