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Mizuho May Tap BlackRock Stake to Buy Asset Managers

Mizuho May Consider Merrill Lynch Share Sale on BlackRock
Yasuhiro Sato, president and chief executive officer of Mizuho Corporate Bank Ltd., poses for a photograph following an interview in Tokyo. Photographer: Akio Kon/Bloomberg

Mizuho Financial Group Inc., Japan’s third-largest bank by market value, may seek to buy investment advisory firms in Asia with BlackRock Inc. after purchasing a stake in the world’s biggest asset manager last year.

Mizuho is studying ways to deepen ties with New York-based BlackRock to aid a strategy of investing Japanese pension money in faster-growing Asian economies, Yasuhiro Sato, president of Mizuho Corporate Bank Ltd., said in an interview.

The Tokyo-based bank aims to leverage the 2 percent stake in BlackRock it bought for $500 million in November to compete with larger rival Sumitomo Mitsui Financial Group Inc., which tied up with Barclays Plc last year in wealth management. The number of millionaires in the Asia-Pacific region reached 3 million in 2009, matching those in Europe for the first time, according to data from Capgemini SA and Bank of America Corp.’s Merrill Lynch & Co. unit.

“The stake in BlackRock alone wouldn’t be enough to manage a substantial amount of money in Asia,” Sato said on Feb. 8. “Acquisitions of management firms in the region will be the next step.”

Sato didn’t specify how an acquisition made together with BlackRock would be structured.

Mizuho rose 0.5 percent to 171 yen at the 3 p.m. close of Tokyo Stock Exchange trading. Japan’s Topix index gained 0.4 percent.

Household Assets

After agreeing to invest $1.2 billion in Merrill Lynch in January 2008, Sato held talks with BlackRock Chief Executive Officer Laurence D. Fink about selling the New York-based firm’s services in Japan, he said. At the time, Merrill Lynch owned a stake in BlackRock. Merrill Lynch agreed to sell itself to Bank of America in September 2008 as the global credit crisis deepened.

“Mizuho’s ties with BlackRock through the previous investment in Merrill are beneficial and vital to boosting its asset management businesses,” said Hironari Nozaki, a Tokyo-based analyst at Citigroup Global Markets Japan.

Japan’s household assets, including pension savings, totaled about 1,400 trillion yen ($17 trillion), according to Sato. He hopes to tap BlackRock’s know-how to sell investment products in Asia outside of Japan.

Sumitomo Mitsui, Japan’s second-biggest lender, targets about 600 billion yen in wealth management assets through its alliance with Barclays. Sumitomo Trust & Banking Co.’s Nikko Asset Management Co. unit in December agreed to buy DBS Asset Management from DBS Group Holdings Ltd. for S$137 million ($107 million).

Mizuho Financial owns a 0.3 percent stake in Bank of America after the conversion of preferred Merrill Lynch stock it bought in 2008, according to the Japanese bank. Mizuho will take “time” to determine whether to maintain its stake in Bank of America and deepen ties with the U.S. lender or to sell the shares, Sato said without elaborating.

“There’s no incentive to sell the shares or break up our relations right now because I expect future U.S. economic growth to more than double Bank of America’s share price,” said Sato.

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