A federal grand jury in Manhattan indicted Daiwa Bank Ltd. today on charges of conducting a massive scheme to cover up $1.1 billion in bond trading losses at its New York branch and regulators ordered the giant Japanese bank to stop doing business in the United States.

The extraordinary 24-count indictment against one of the world's largest banks and one of its New York managers was based on what prosecutors alleged was an elaborate plan by top bank officials to hide the trading losses from U.S. regulators and deal with the problem quietly back in Japan.

The indictment, announced here by U.S. Attorney Mary Jo White, lays out details of a series of events last summer. The alleged coverup included secret meetings among bank officials at Manhattan's Park Lane Hotel to plot strategy, and the phony transfer of hundreds of millions of dollars between Daiwa's offices in New York and Japan.

The bank was accused of mail and wire fraud, conspiracy, falsifying bank records and failing to report and concealing federal crimes.

Besides losing its position in the important U.S. market, Daiwa faces fines of as much as $1.3 billion for what White called "egregious corporate conduct and crimes at the highest level of a major financial institution." {Related story, Page A30.}

The action against Daiwa is the biggest that U.S. authorities have taken against a foreign bank since the 1991 charges against the Luxembourg-based Bank of Credit and Commerce International, which was accused of hiding the fact that it owned several U.S. banks.

"The message to the financial community from today's action should be clear and unambiguous," White told a packed news conference. "Law enforcement will not tolerate financial institutions {that} unlawfully attempt to mislead regulatory authorities and to cover up criminal misconduct by their employees."

Daiwa said in a statement that it will fight the charges. The bank portrayed itself as the victim of Toshihide Iguchi, the 44-year-old executive vice president of the New York branch, who pleaded guilty to covering up the $1.1 billion in unauthorized bond trades over an 11-year period and embezzling about $500,000 from the bank.

Iguchi hid the losses by selling securities held in customer accounts and then doctoring the banks' records to conceal that the securities had been sold. Daiwa had said it will cover any losses that customers would have otherwise suffered by the unauthorized sales. "Blaming Daiwa Bank in the criminal courts for thievery and other unauthorized activities makes no sense," Takashi Kaiho, the bank's newly named president, said in a statement. He firmly rejected the charge that senior Daiwa officials tried to get Iguchi to conceal his losses.

Today's actions are sure to deepen worries in global financial markets over the stability of Japan's banking system. The initial disclosures in late September about Daiwa's trading losses prompted concern over the possibility that other Japanese banks might be hiding similiar problems. The prosecutors' allegations that top Daiwa executives engaged in a deliberate coverup are sure to exaggerate such fears, even though Daiwa -- which has about $314 billion in assets -- was able to absorb the bond trading losses.

U.S. banking regulators said they were taking the sweeping step of kicking Daiwa out of the United States altogether because Daiwa and its New York-based Daiwa Bank Trust Co. engaged in a pattern of unsafe and unsound banking practices and several illegal acts over an extended period of time. Daiwa has offices throughout the United States.

Daiwa issued a statement announcing that it will sell its U.S.-based operations, which have $10.5 billion in assets, to comply with the order by federal and state banking regulators to withdraw from the United States within 90 days.

The dramatic turn in the burgeoning banking scandal raises the prospect of U.S. prosecutors demanding the extradition of Japanese banking executives to the United States -- a development that could obviously fray the already-strained ties between Washington and Tokyo.

The only Daiwa executive named in the federal actions, Masahiro Tsuda, former general manager of the New York branch, voluntarily surrendered to federal authorities and was arraigned before a federal judge.

Daiwa said that after the bond trading losses first came to its attention last July, it held off reporting what it knew to U.S. authorities because of its "desire to investigate thoroughly the unauthorized activities by which it was victimized, to take all necessary action to protect our customers, and to act in a way that was not harmful to the international banking system."

But the indictment spells out a starkly different picture of what happened in late July after Daiwa's then-president, Akira Fujita, received a series of rambling letters from Iguchi.

The indictment clearly is based to a considerable extent on an account of events supplied by Iguchi, who is cooperating with prosecutors as part of his guilty plea. But law enforcement officials at the news conference said they also had interviewed many other Daiwa employees and developed an extensive paper trail to support their case.

According to the indictment, Iguchi's letters suggested ways in which the $1.1 billion in losses might be kept hidden from U.S. authorities and shifted back to Japan, where there are looser rules concerning the disclosure of bank problems.

On July 28, according to the indictment, Iguchi met at the Park Lane with top Daiwa officials, including Tsuda, the general manager of the New York branch, and a managing director from Japan. At that meeting, the managing director allegedly told Iguchi that the bank intended to disclose the loss "in some form" in late November after Daiwa had announced its six-month results and the "thereafter asked Toshihide Iguchi, in substance, whether he would be willing to be transferred to an affiliate of Daiwa in Japan," according to the indictment. The managing director also allegedly directed Iguchi to continue hiding his losses by selling customer bonds. On July 29, Iguchi met again at the Park Lane with the top Daiwa officials, and brought documents conclusively showing the size of the loss he had incurred and how he had covered it up, according to the indictment. After confirming the losses, "the managing director then asked {Iguchi} to destroy the computer disk on which he had prepared the confession letter," the indictment stated, and he subsequently asked Iguchi to prepare an undated letter that included "only his unauthorized trading and the losses that resulted from that trading."

In mid-August, Daiwa allegedly considered using an entity in the Cayman Islands to absorb the losses incurred in New York. It had used a similar scheme in the mid-1980s to conceal a much smaller loss of about $97 million incurred by Daiwa Trust Bank, according to the indictment. But the plan was allegedly rejected as an impractical method of hiding Iguchi's losses.

Daiwa finally "settled on a plan to conceal {the losses} by engaging in transactions between the New York Branch and Daiwa's offices in Japan," according to the indictment.

Also unclear is why Daiwa finally did disclose the losses to U.S. and New York banking regulators in mid-September. Asked whether the bank's top officials realized they probably couldn't sustain the coverup, or whether some other event led to had prompted the disclosure, White again declined to comment, noting that the investigation is continuing. CAPTION: U.S. Attorney Mary Jo White announces the criminal indictment against Daiwa with James Kallstrom, assistant director of the FBI's New York office.