The bank's London, Hong Kong, Shanghai, Seoul and Singapore offices will be closed by next March, while liquidating overseas banking subsidiaries, Daiwa's President Takashi Kaiho said.

The bank now aims to concentrate on retail banking for small firms and individuals mainly in the Osaka region.

"Strongest super regional bank"

"We have decided to pull out of inefficient business so that we can concentrate our resources on areas where we are competitive. Our goal is to become the strongest super regional bank in the Osaka area," said Mr Kaiho.

The bank also plans to introduce a 10% wage cut on all its employees.

Prime minister Keizo Obuchi has urged banks to accept public funds

Earlier this month, Prime Minister Keizo Obuchi said that Japan's banks were in the red to the tune of over ¥100 trillion ($840bn).

Japan's banking crisis is a result of the bad debts and loans which financial institutions amassed in the 1980s as a result of the speculative bubble economy.

Nikko and Sumito lead the way

The shut down of Daiwa's global operations follows in the footsteps of Japan's Nikko Securities Co. which announced recently it would close its offices in Malaysia and Thailand.

In March, Sumito Bank Ltd withdrew its retail banking in the US.

Earlier this month Japan's upper house of councillors passed the last of crucial banking reforms, setting up a ¥60 trillion fund of public money to prop up weak but solvent banks.