TOKYO, June 12 (Reuters) - The president of top Japanese bank Mizuho admitted on Wednesday that its management did not appreciate the risks of joining up computer systems when it was formed by the merger three banks.

Computer problems affected millions of transactions when Mizuho Holdings Inc (8305) was created in April.

"I have to say that the management did not appreciate operational risks of consolidating our computer systems," Mizuho President Terunobu Maeda told the Japanese parliament.

The comment came after business daily Nihon Keizai Shimbun reported on Wednesday that Japan's banking regulator concluded after a month-long inspection that human error involving insufficient preparation for the merger caused the nationwide computer system failure.

Maeda said on Tuesday that Mizuho had been harshly criticised by Japan's financial watchdog, the Financial Services Agency (FSA), but declined to give details.

The FSA is expected to announce within a week what actions it will direct Mizuho to take to improve its performance, and at the same time may take the unusual step of releasing the report of its inspection of the bank.

Mizuho, the world's biggest bank by assets, was created through a merger of Dai-Ichi Kangyo Bank, Fuji Bank and Industrial Bank of Japan.

Computer glitches affecting 2.5 million transactions were caused by problems linking their separate computer systems, preventing customers from making withdrawals or deposits at Mizuho's 7,000 ATMs across Japan.

Maeda told lawmakers on Wednesday that insufficient tests on the combined computer systems had also caused problems in transferring funds between bank accounts.

Shares of Mizuho ended Wednesday morning down 0.61 percent at 325,000 yen, while the Nikkei average was down 1.44 percent.

iwon

-- Anonymous, June 12, 2002