Mizuho Considers Buying Stakes in Asian Banks, Increases Hiring
Nobuhide Hayashi, managing director of Mizuho Corporate Bank
Tomohiro Ohsumi/Bloomberg
Nobuhide Hayashi, managing director of Mizuho Corporate Bank Ltd., speaks during an interview in Tokyo.
Nobuhide Hayashi, managing director of Mizuho Corporate Bank Ltd., speaks during an interview in Tokyo. Photographer: Tomohiro Ohsumi/Bloomberg
Mizuho Financial Group Inc. may seek stakes in Asian investment banks and would consider spending about 100 billion yen ($1.2 billion) on an acquisition should it find a suitable target, a senior executive said.
“Non-organic growth is an important option for us and the emphasis is on Asia,” Nobuhide Hayashi, 53, head of international banking at Mizuho Corporate Bank Ltd., said in an Aug. 19 interview in Tokyo.
Mizuho Corporate, an investment banking unit of Japan’s second-biggest publicly traded lender by assets, wants to boost the share of profit coming from overseas to 40 percent by March 2013 from 30 percent last fiscal year, Hayashi said. Mizuho would “gladly” consider buying Asian assets from European banks stung by the credit crisis, he said.
Mizuho and rivals Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. are shifting resources abroad as Japan’s sluggish economy limits profit growth at home. The Tokyo-based lender trailed its competitors in acquisitions in Asia over the past three years as it repaired a balance sheet damaged by soured investments tied to U.S. subprime mortgages.
Shares of Mizuho rose 0.8 percent at the 3 p.m. trading close in Tokyo yesterday, narrowing this year’s drop to 20 percent. Japan’s three largest banks, which earned no more than 22 percent of revenue overseas last year, according to data compiled by Bloomberg, are following rivals HSBC Holdings Plc and Citigroup Inc. in seeking growth in Asia.
Hiring Plans
Hayashi said Mizuho is hiring 170 local bankers in Asia this year in areas including risk management and marketing as it seeks to boost lending. The World Bank in June forecast developing nations in East Asia will expand 8.7 percent this year and 7.8 percent in 2011, compared with 2.5 percent and 2.1 percent growth for Japan in the same periods.
Mizuho plans to shift 3 trillion yen in assets to “strategic” business areas such as Asia by March 2013, according to a three-year business plan released in May. Hayashi’s international banking group targets a 25 percent increase in profit from operations to 79 billion yen this year, compared with a 4.3 expected gain for the bank’s domestic corporate business. Mizuho forecasts net income of 430 billion yen for the 12 months ending March 31, 2011.
Hayashi said the lender would consider buying a stake in an Asian investment bank to augment existing skills, or a commercial bank that would help it gain a market foothold. The Japanese bank would target a controlling share where possible, he said, adding that no deal announcement is imminent.
Asian Investment
Mizuho has made one investment in an Asian financial institution outside Japan in the past three years. It invested HK$400 million ($51 million) in China Citic Bank Corp., the banking unit of the nation’s largest investment firm, in October 2007. Mizuho aims to have 11 outlets in China by year-end, giving it the largest network among Japanese financial companies.
Sumitomo Mitsui acquired stakes in Hong Kong-based Bank of East Asia Ltd., South Korea’s KB Financial Group Inc. and Vietnam Export-Import Commercial Joint-Stock Bank since 2008, and said in June it will invest about $295 million in Kotak Mahindra Bank Ltd., owner of India’s largest brokerage.
Mitsubishi UFJ purchased stakes in Indonesia’s Bank Nusantara Parahyangan, Singapore’s Kim Eng Holdings Ltd. and Hong Kong’s Dah Sing Financial Holdings Ltd. in the past three years.
Mizuho booked more than $10 billion in losses from investments in U.S. subprime-related securities, more than any other Asian bank. It returned to profit last fiscal year after a 588.8 billion yen loss a year earlier.
Share Sales
The lender has raised about 1.3 trillion yen in two share offerings since July 2009, as global regulators demand banks bolster their balance sheets. Before the share sales, it had the lowest capital ratio among 45 global banks, according to a report by Standard & Poor’s in November 2009.
As Mizuho turns to Asia, Mitsubishi UFJ and Sumitomo Mitsui are considering acquisitions in the U.S. to accelerate earnings growth following share sales of their own.
Mitsubishi UFJ, which bought California’s UnionBanCal Corp. in 2008, may spend more than 500 billion yen to acquire more American lenders, Tatsuo Tanaka, head of global banking, said in July. Sumitomo Mitsui may spend as much as $5 billion buying a stake in a U.S. commercial lender in the next three years, Hiroshi Minoura, head of international banking at the company’s Sumitomo Mitsui Banking Corp. unit, said the same month.
New financial legislation, including the creation of a consumer protection bureau signed into law by President Barack Obama in July, may make banking in the U.S. less profitable because of limits on fees, Hayashi said.
To contact the reporters on this story: Finbarr Flynn in Tokyo at fflynn3@bloomberg.net; Takako Taniguchi in Tokyo at ttaniguchi4@bloomberg.net
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