Will regulators’ orders suffice to improve operations at Mitsubishi UFJ?

After regulators ordered the bank to improve its operations Chief Cabinet Secretary Yasuhisa Shiozaki said Mitsubishi UFJ Financial Group Inc. needs to establish a system to protect its clients.

Japan's largest banking group was ordered to improve compliance in its operations by the Financial Services Agency after rule breaches including mishandling sales of investment trusts.

“We'd like the bank to make the utmost effort to improve its internal management system and regain clients' trust,” said Shiozaki at a regular press conference in Tokyo today.

Mitsubishi UFJ has been sanctioned by regulators in Japan and the U.S. for compliance problems in three business areas during the past six months. The New York branch of Mitsubishi UFJ's main bank needs to strengthen anti-money laundering programs and secrecy protections, according to settlements the banks signed in December with U.S. regulators.

Shiozaki said the issue of managers' responsibility should be assessed after the bank shows the results of its operation improvements. “Financial institutions must establish strong systems to protect clients,'' he added. Mitsubishi's main banking unit has until July 11 to report to regulators on how it will improve compliance.

IS Shiozaki’s recommendation to improve operations enough? Can clients trust Mitsubishi UFJ again after rule breaches or has the matter been dealt with effectively?