Sanwa's vice president Junichiro Kojima said at a news conference: "We apologise for causing this incident." The bank dismissed the manager, who ran a branch in Tokyo's Ota ward, on Wednesday, and made a formal complaint to police against him for breach of trust on the same day, he said.
Analysts said, however, that while the reputation of Sanwa would be hurt by the news, the impact on the bank's business would probably be nil.
"Depositors are worried about business conditions at smaller financial institutions after a series of collapses last year, and they are shifting their deposits to big banks and the government-run postal savings system," said Takehito Yamanaka, an analyst at New Japan Securities Research Institute.
"Even if Sanwa's image is tainted, it is not likely that depositors will move their money away from the bank," he said.
Sanwa's Kojima said the bank had been conducting an in-house investigation on the alleged embezzlement since early April, when it received a request from a customer to check a deposit made on March 31.
The bank discovered that the former branch manager was told by third parties to withdraw money from the customer's account. He took the 550 million yen and gave it to the third parties, Kojima said. Sanwa did not disclose the third parties' identities.
Sanwa's managing director Takayo Mochizuki told the same news conference that the former branch manager had loans outstanding of about 100 million yen ($917,000) which had been guaranteed by the third parties.
The manager had invested in commodity futures and stocks, but he did not use any of the 550 million yen he had embezzled to pay back his borrowings, Mochizuki said.
Since the bank believed that people other than its employees had been involved in the alleged embezzlement, it asked the police to investigate in early April, he said.
The bank had paid back 550 million yen to the customer. "Now we will try to recover as much as possible (of the money)...unless we can, it will become the loss of the bank," Mochizuki said.
Analysts said the 550 million yen was a small amount for Sanwa, whose operating profit from ordinary banking business totalled 490.89 billion yen ($4.50 billion) in fiscal 1995/96, which ended on March 31.
