Big Japanese Bank Admits Ties to Key Figure in Scandal : Finance: Industrial Bank of Japan Ltd. said Nui Onoue, who allegedly borrowed $2.48 billion from a credit union using false documents as collateral, has been one of its clients for four years.

Industrial Bank of Japan Ltd., one of the world’s most powerful banks, Wednesday admitted close links to a suspect in Japan’s largest financial scandal.

Banking industry analysts and officials said the image of IBJ as “creme de la creme” in the industry has been sullied by the revelation. The reputations of several other Japanese banks have also been damaged recently by a spate of similar scandals.

On Tuesday, an Osaka-based credit union, Toyo Shinkin Bank, revealed that one of its former branch managers had issued 13 false deposit certificates worth $2.48 billion (342 billion yen) to Nui Onoue, a client.

Osaka prosecutors arrested Onoue and the former manager Tuesday for allegedly forging deposit certificates, and a third suspect involved in the scandal was detained Wednesday.

An IBJ spokesman acknowledged Wednesday that Onoue, who allegedly borrowed money using the false documents as collateral, has been a client of the bank for four years.

Onoue, a restaurant owner, was a large buyer of IBJ debentures, and was once the largest individual shareholder of the bank, the IBJ spokesman said.

She was well-known in financial circles for being a heavy investor in the stock market, but the source of her funds was not widely known, several bank officials told Reuters.

Kyodo news service quoted IBJ sources as saying IBJ granted Onoue loans amounting to about $730 million (100 billion yen) since last year. In addition, its affiliated financial firms lent Onoue a total of $1.4 billion (200 billion yen) during the period, the agency said.

The IBJ spokesman declined to comment on the amounts involved. But on Tuesday, the bank admitted having made loans to Onoue.

“IBJ’s image as the bluest of the blue has been tarnished,” UBS Phillips & Drew International analyst Linda Daquil said.

Several newspapers reported that Fuji Bank Ltd. was among institutions that lent money to Onoue. A Fuji Bank spokesman declined to comment.

But a spokesman for Tokai Bank affiliate Central Finance Co. told Reuters that it had $220 million (30 billion yen) in outstanding loans to Onoue.

In unrelated developments, both Fuji Bank and Tokai Bank have recently disclosed that former employees issued false deposit certificates.

On Tuesday, another IBJ official said the bank was one of the victims in the fraud as it lent money to Onoue based in part on the false deposit certificates. However, he said the bank would take appropriate measures to aid Toyo Shinkin in conjunction with the monetary authorities to preempt a possible run on the credit union.