In a move suggesting further deterioration in the cozy relations between banks and regulators, the Financial Services Agency slapped banks with a business improvement order Friday for failing to meet pledged targets in fiscal 2002.
The order targets five major banks and 10 regional banks whose capital includes public funds. They will be given until Aug. 29 to submit revised plans to turn their earnings around. If they fail to come within 30 percent of the new targets in the current business year, the FSA can demand changes in management.
This is the first time the FSA looks to be doing what it promised it would, which is to hold banks to business plans that analysts and even regulators have not taken seriously. To maintain the premise that banks would repay public funds on schedule, regulators have habitually winked at and excused them when they failed to meet planned earnings.