Diane Casey-Landry

When Heizo Takenaka unveiled a vaguely worded report on bank reform late last month, the dominant reaction was that Japan's new financial tsar had ducked away from the radical surgery needed to heal the ailing sector.

Fast forward two weeks, however, and signs have emerged that the blueprint savaged by large sections of the domestic and foreign media as toothless could have a vicious bite.

Shares in UFJ Holdings, seen as one of the weaker leading banks and which has some of Japan's worst debt offenders, plunged to life-time lows on Friday as rumours swirled it would have to drastically cut its bad loans or risk surrendering management control to the government.

Morgan Stanley's chief Japan economist Robert Feldman said: "If you examine Mr Takenaka's intentions and the final plan that he put out, it's clear he made a lot more progress than the press originally gave him credit for. I think that fact is now better understood by . . . investors." more