List1. The Course of this Case
August 20, 1999

Dai-Ichi Kangyo Bank, Fuji Bank and Industrial Bank of Japan announced a wide-ranging
alliance to create the world's largest bank through a joint holding company.

December, 1999

The banks agreed on the plan to integrate the entire Mizuho Bank system, which primarily
serves individuals and small and medium-sized companies, on the existing Dai-ichi
Kangyo Bank system in April 2002.

September 29,2000

Mizuho Holding Inc. was established as the holding company of Mizuho Financial group,
to become the integrated body of Dai-Ichi Kangyo Bank, Fuji Bank and Industrial Bank ofJapan.

December, 2000

May 10, 2001

December, 2001

Early March 2002

The banks reviewed their original plan of banking system integration and agreed on
postponing it until April 2003 and interfacing the three banks’ systems. The interface
scheme would take the Dai-ichi Kangyo Bank system as the primary banking system, anda relay system for bridging the primary system and the two banking systems of Fuji Bankand Industrial Bank of Japan.
However, the program added to handle logical connection between the primary systemand the relay systems had a bug that would cause a specific problem in certain
circumstances. The bug was undetected during the connection and load tests
conducted prior to the banking operation on April 1.

The relay system plan was adopted unanimously by the Mizuho Holdings board .The
Financial Services Agency (FSA) evaluated the integration scheme of the Mizuho
Financial Group’s new banks from March through June 2001. It expressed concern about
the delay in preparation for the scheduled integration and reminded the company of
the issues of its integration scheme.

The banks agreed that among the Mizuho Corporate Bank branches, the ones running
the Dai-ichi Kangyo Bank system would process data of more than 50,000 accounts
including large corporations and financial institutions, instead of the ones running theIndustrial Bank of Japan’s system. The original plan specified the Bank of Japan’s system
to process the data; however, it was later found that the system was not well suited formass data processing. The banks notified their corporate customers of the changes inthe bank and the branch codes effective on April 1, and requested appropriatechanges to be made to their scheduled transactions as well as to the transactions datain the Japanese Bankers Association format. Fuji Bank and Industrial Bank of Japan
would take the bank code of Dai-ichi Kangyo Bank, and some branch codes wouldchange on April 1, 2002.

The engineers tested the integrated banking system for debit transactions. On March 22,
the Mizuho Holding management committee received from the banking system division
the status report saying that preparation for the new banking system was coming along
almost as scheduled. It decided to go ahead with the scheduled integration of bankingsystems. The engineers did not thoroughly test the new system for its overall processing
load in a large-scale operation with various transaction requests, including requests ofinvalid debit transactions, because there was not enough time to conduct such an
exhaustive test.

March 30,2002

April 1, 2002

The banks started processing account data., two days before the first day of the newbanks in business. The batch processes for allocating data to the three banking systems
were interrupted by mismatches of bank and branch codes because of account datacontaining both the old and new codes. A programming bug also caused errors during
processing debit transaction data in non-FSA formats. Although the program wasmanually debugged, processing was delayed, resulting in more than 50,000
unprocessed account and transaction data. The bank group went ahead with thescheduled system integration, assuming that the delay in data processing would notaffect on the new banks’ operations as long as all would be completed processing by
the end of April 1.

The three banks were officially and legally combined into two companies, Mizuho Bankand Mizuho Corporate Bank. ATM transaction errors started to occur at the Mizuho Bank
branches. The ATMs at branches formerly operated by Fuji Bank only accepted the ATMcards provided by the former Fuji Bank. While customers had no problem with the formerFuji Bank ATM cards at branches formerly operated by Fuji Bank, ATMs at other new
Mizuho Bank branches dispensed no cash although debits were made from theaccounts.
Mizuho Bank disconnected the relay systems from the primary banking system. It foundthe cause of the ATM transaction errors at around 13:00.
While operators manually corrected the transaction and money remittance errors, morethan 100,000 automatic debits were backlogged.
This inadvisable manual correction resulted in another issue, loss of account data, toarise. The bank later discovered that the confidential data of account holders wereaccidentally disposed of.

April 2,2002

The ATM systems were restored.

April 4, 2002

The bank reported publicly the delay in automatic debits.

April 5, 2002
April 8, 2002
April 9, 2002

The bank reported 2.5 million delayed debits since April 1. More than 30,000 double
debits were found.
An additional 30,000 double debits were found (restored by April 9).
The backlog of automated debits was reduced to 150,000. The president of Mizuho
Holdings had a press conference after he testified in a congressional hearing that thebank would be able to normalize operations in April.
Additional delayed debits were found, resulting in a backlog increase to 400,000.

April 11, 2002
April 18, 2002
April 30, 2002
May 8, 2002

May 21, 2002

The backlog of automated debits was cleared except for a substantial delay inforwarding of credit advices.
Month-end 12 million automatic debits were processed normally as scheduled.

FSA and the Bank of Japan decided to conduct an emergency inspection.

FSA dispatched the financial regulator to inspect Mizuho Bank on-site. The president ofMizuho Holdings said at a press conference that the bank was expecting a loss of 1.8
billion yen attributed to the banking system failure.