(Provisional Translation)
February 15, 2007
Financial Services Agency
Government of Japan

Administrative Actions Against The Bank of Tokyo-Mitsubishi UFJ, Ltd.

1. Description of Administrative Actions

Order based on Article 26 (1) of the Banking Law

(1) The bank must suspend its credit dealings with new customers (customers with whom there are no existing dealings) at all corporate business bases in Japan for a period of seven consecutive days determined by the bank between Monday, April 9, 2007 and Monday, July 9, 2007 in each regional segment of the bank. The specific regions and the period must be stated in the plan to improve business operations referred to in (5) below and submitted in advance to the Financial Services Agency (FSA).

(2) A training scheme must be implemented with respect to all executives and employees that belong to the corporate business bases in the regions during the period referred to in (1) above. Said training scheme must be strictly enforced by making the relevant divisions at the headquarters directly communicate the plan to improve business operations referred to in (5) below and the purpose and the content of the internal rules, manuals, etc. based on the plan to all executives and employees, and in doing so, ensure that each executive and employee spends at least one day completely away from their normal duties so as to concentrate on the training scheme.

(3) The bank must not establish any new corporate business bases in Japan from Thursday, March 1, 2007 to Friday, August 31, 2007, based on the view that the establishment of measures referred to in (2) should be confirmed before doing so.

(4) The organization and its operational aspects must be fundamentally reevaluated for the purpose of enhancing their governance, internal control systems, etc. with due emphasis on the following points:

1) Clarification of management responsibilities from the time the problem arose up to present;

2) An unequivocal statement of the management's commitment and system with respect to efforts on the problem case and compliance with laws and regulations;

3) Formulation of effective and concrete measures and establishment of a bank-wide compliance system aimed at preventing the recurrence of the problem case (including ensuring mutual-checking functions cutting across relevant divisions and enhancing screening management systems);

4) Ensuring the effectiveness of internal audit functions;

5) Establishment of a centralized management system for performing ''notification of suspicious transactions'', etc. adequately under the Law for Punishment of Organized Crimes, Control of Crime Proceeds and Other Matters in a precise manner; and

6) Ensuring the development of a system through the holding company's management functions.

(5) The plan to improve business operations referred to in (4) above (including formulating and developing necessary internal rules, manuals, etc.) must be submitted by Friday March 16, 2007 and implemented promptly after it is received by the FSA.

(6) Subsequent to the implementation of (5) described above, and until the plan to improve the business operations has been fully carried out, a summary outlining the progress and implementation of the plan must be prepared every three months, starting at the end of April 2007 and ending at the end of July 2007, and is to be submitted by the 15th day of the following month.

2. Reasons for Administrative Actions

(1) According to the report submitted by the bank in response to the reporting order issued pursuant to Article 24 (1) of the Banking Law, the bank's Awaji branch--a corporate business base and initially a former branch of Sanwa Bank --was found to have engaged in extremely unusual transactions (credit increase in breach of internal rules, spot custody, seconding of bank employees to debtor's office, etc.) for a long period of time (hereinafter referred to as ''the present case''). The former Sanwa Bank and former the UFJ Bank both failed to make effective efforts to solve the problem even though the successive management teams and the relevant divisions at the headquarters had knowledge of the circumstances. Moreover, even in the Bank of Tokyo-Mitsubishi UFJ, the management team and the relevant divisions at the headquarters failed to deal with it sufficiently in consideration of the case before, during and after its inception as described below. In general, serious problems have been identified in the governance system, internal control system and compliance system.

1) The successive management teams of the former Sanwa Bank and the former UFJ Bank were found to have failed to fulfill their management responsibilities in not taking any specific action to solve the problem over many years out of fear of unexpected circumstances, etc. even though they were aware that inappropriate transactions were being conducted or the actual state of the business fronts was suspicious.

2) The relevant divisions at the headquarters of the former Sanwa Bank and the former UFJ Bank were also found to have failed to take effective organized action, including the audit division's failure in pointing out the present case, and in demonstrating their mutual-checking functions. This stemmed from poor awareness of the case, having already been identified by the management team, and the poor management attributable to the lack of clarity of the responsible divisions.

3) As the executive division decided not to pass on the report of the present case to the ''Business Supervision Committee'' of the former UFJ Bank (an organization whose positioning was clarified in the plan to improve business operations announced to the public in July 2004. Its objective was to fundamentally enhance corporate governance, where outside experts identify the situation of compliance with laws and regulations, etc. from a standpoint independent of the executive division and demand the management to solve the situation), the committee was found to have failed to function with respect to the present case.

4) Even in the steps leading up to the inception of the Bank of Tokyo-Mitsubishi UFJ, no information was shared between former UFJ Bank and former Bank of Tokyo-Mitsubishi, and countermeasures were examined only at the former UFJ Bank. Moreover, no report was made to the already-established holding company. In this manner, it was found that the checking functions have not been demonstrated as the organizations did not collaborate with each other.

5) It was found that the governance of the bank has not been demonstrated sufficiently even after the inception of the Bank of Tokyo-Mitsubishi UFJ. In other words, responses to the present case were not led by risk management and compliance divisions, and reports to the top management had not been made in a timely manner, even though the case could have had a serious impact on management. Measures taken subsequently to prevent its recurrence focused on deploying specialist staff, etc. to communicate the actual state of the business fronts to the headquarters and the management team as soon as possible, and no specific measures were taken to enhance the management team's adequate response after obtaining the information as well as collaboration between the relevant divisions at the headquarters.

6) Appropriate action had not been taken through the former UFJ Bank and the Bank of Tokyo-Mitsubishi UFJ with respect to the notification based on paragraph 1, Article 54 of the Law for Punishment of Organized Crimes, Control of Crime Proceeds and Other Matters (enforced in February 2000), and the management system was found to be inadequate.

(2) In order to prevent such a case from occurring, it is important for the management team, the relevant divisions at the headquarters and the business fronts to reconfirm the importance of compliance with laws and regulations in consideration of the highly public characteristics of banks. With this in mind, it is necessary to build and implement a concrete and effective compliance system, including specific measures to review transactions, based on a sufficient understanding of its content by the management team and the business fronts, from top to bottom.

Contact

Financial Services Agency, Government of Japan
Tel: +81-(0)3-3506-6000 (main)
Banks Division I, Supervisory Bureau (ext. 3751)

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