Ailing Japanese Bank Ordered Shut Down

For the first time in 50 years, Japanese financial regulators ordered a commercial bank to close and never reopen, saying it was on the verge of collapsing under a heap of bad debt. Some analysts praised the closing of Hanwa Bank as a sign that Japanese authorities may be taking a more aggressive approach toward cleaning up the massive bad loan problem dogging Japan’s once-mighty banking system. Regulators apparently moved to close Hanwa, based in the western city of Wakayama, to avoid a run on deposits later in the day when the company announced its interim financial results. The government has guaranteed all deposits at Hanwa, and said its business would be taken over by a company that would be assigned to liquidate Hanwa’s assets and dissolve the bank.