Mizuho Financial Group's <8411.T> president will step down and its corporate banking chief will take the helm, Japan's second-largest bank said on Monday, as it grapples with persistent system troubles including a breakdown in ATMs after the devastating March earthquake.

The group also announced a unified structure for its core banking units, which it aims to merge within two to three years, after coming under fire for a fragmented system that hurts efficiency and fosters operational glitches.

After the system trouble, Mizuho's management came to have a renewed sense of crisis, outgoing President Takashi Tsukamoto said at a news conference.

To ride out this crisis, we decided we needed to show a new direction for Mizuho and unite behind it ... We have determined to move toward a one-bank structure, he said.

Mizuho's management reshuffle and structural revamp came after an independent committee report last Friday in part blamed a lack of managerial oversight for a large-scale computer system failure immediately after the March 11 earthquake and tsunami in northeast Japan.

Thousands of transactions were disrupted and automated teller machines were forced to shut down due to system malfunctions, after accounts that were opened to take donations for disaster relief became flooded with wire transfers.

The public and regulators were particularly irked because it was the bank's second massive system mishap in 10 years.

Tsukamoto will become head of Mizuho's retail banking unit, whose current chief, Satoru Nishibori, will step down. Yasuhiro Sato, who heads Mizuho Corporate Bank, will take over as the group's president. The appointments are effective from June 21, pending approval at a shareholders' meeting that day.

The new president will be given stronger rein over the group, for example by serving as the only insider on the bank's executive nominating committee.

TWO-BANK STRUCTURE

Critics have blamed the financial group's system troubles on its bloated and convoluted structure, which they say lacks a clear chain of command and firm grip on risk management.

All of Japan's top banks were created by mergers around 2000, when rivals rushed into each other's arms as their very survival was cast into doubt during the country's financial crisis of the late 1990s.

But Mizuho, the result of a three-way merger, has been considered slower than rival megabanks in integrating operations, which analysts say is evident in its two-bank system with separate units for retail and corporate banking.

Tsukamoto acknowledged that the structure's overlapping functions are harming cost efficiency.

We are keenly aware that per-head profitability has been a problem for Mizuho, he said.

Mizuho ranks second by assets after Mitsubishi UFJ Financial Group <8306.T> but lags third-ranked Sumitomo Mitsui Financial Group <8316.T> in both profit and market value.

Since the merger that formed Mizuho about a decade ago, executives from the three former banks have evenly split the top posts at the holding company and the two core units.

Tsukamoto has been trying since he took the helm in 2009 to reshape the conglomerate, accelerating integration of overlapping functions among its units.

In March, Mizuho announced it would buy out minority shareholders in its brokerage units and trust bank, to tighten its grip over them.

(Editing by Edmund Klamann)

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