Japan's financial authorities ordered Mizuho Bank and its parent Mizuho Financial Group Inc. Friday to improve their operations and clarify management responsibility for a series of system failures, in punitive actions that promoted the major financial institution to replace top executives.

The Financial Services Agency ordered them to present measures to prevent a recurrence, while the Finance Ministry ordered the bank to take corrective action, judging that proper anti-money laundering procedures were not implemented for foreign currency remittances in the wake of a system glitch on Sept. 30.

"The management of the bank and the company hold serious responsibility" for the total of eight system failures between February and September that "undermined the credibility of the settlement systems in Japan," the agency said in the administrative order.

The financial watchdog said both entities lacked a sense of urgency in assessing what impact such problems could cause to their customers and demanded that they implement preventive steps as soon as possible.

The Finance Ministry said the bank's executives lacked knowledge of the Foreign Exchange and Foreign Trade Control Law, which requires proper anti-money laundering procedures for overseas remittances. The ministry said communications among sections were insufficient and ordered that prevention steps be submitted by Dec. 17.

Mizuho Financial said the same day that President Tatsufumi Sakai and Mizuho Bank President Koji Fujiwara will resign on April 1.

A successor to Sakai will likely be picked later, while at the banking unit Vice President Masahiko Kato is expected to replace Fujiwara as president, the sources said.

On Feb. 28, around 80 percent of the bank's automated teller machines were temporarily suspended due to a system failure, with more than 5,000 bank cards and bank books getting stuck inside the machines.

The orders came after the agency on Nov. 19 finished its investigation of the chronic system failures.

The agency has been stepping up its supervision of Mizuho, requesting in a business improvement order issued before the eighth failure that it submit a work plan for system maintenance, in a rare move that effectively imposed oversight on a major bank's systems.

Although Mizuho Bank drew up preventive measures in June after experiencing four system failures, the bank has since been hit by similar problems four more times.

==Kyodo

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