TOKYO (AFP) - Tokyo police are preparing to launch a probe into Mizuho Financial Group's loans to gangsters, a report said on Sunday.

The Tokyo Metropolitan Police are eyeing fraud allegations against the gangsters, who are thought to have received the loans by hiding their affiliations with criminal organisations, the Asahi Shimbun said.

Mizuho has been cooperating with police, the newspaper added.

The bank, one of Japan's three biggest, has been under fire since it emerged that it had processed hundreds of transactions worth about 200 million yen (S$2.53 million) for "anti-social forces", a common term for Japan's Yakuza mobsters.

The bank initially said its top executives did not know about the payments.

But Mizuho Financial Group president Yasuhiro Sato later admitted he and others had been appraised of the bank's dubious dealings with members of Japan's underworld.

The Financial Services Agency last month admonished the bank for taking "no substantial steps" in dealing with the issue of loans to the mob after it was first discovered two years ago, and pointed to "serious problems" with its compliance monitoring.