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Mizuho to Boost Overseas Loans 30% a Year as Europe Retreats

Mizuho Corporate Bank Nobuhide Hayashi
Mizuho Corporate Bank Managing Executive Officer Nobuhide Hayashi. Photographer: Tomohiro Ohsumi/Bloomberg

Mizuho Financial Group Inc. plans to boost overseas lending by as much as 30 percent a year as it targets Asian companies unable to borrow from European banks that are retrenching amid the euro area’s debt crisis.

Japan’s third-largest lender by market value is now marketing to about 120 potential borrowers globally including Tata Group, Volvo AB and Prada SpA, said Nobuhide Hayashi, a managing executive officer at Mizuho’s corporate banking unit. The banking group expects 30 percent of operating profit to come from abroad within three years and may consider acquiring a financial institution, he said.

Mizuho and bigger rivals Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. are targeting higher-yielding markets as European banks sell assets, making up for declining profitability on loans in Japan. Mizuho’s planned acquisition of Dusseldorf-based WestLB AG’s Brazilian unit will enhance the bank’s ability to lend abroad, Hayashi, 55, said.

“A key to boosting overseas lending would be to utilize our network, including WestLB’s Brazilian unit,” he said in an interview on July 20. “Asian companies have increased trade with Brazil and our buyout of the firm would help us increase cross-border financing between South America and Asia.”

Shares of Mizuho rose 0.8 percent to 121 yen as of 9:50 a.m. in Tokyo Stock Exchange trading. They have jumped 15 percent this year, compared with the benchmark Nikkei 225 Stock Average’s 1 percent decline.

Higher Rankings

The Japanese lender increased loans overseas by 25 percent from a year earlier to $127.8 billion as of March 31, according to company presentation materials. About 20 percent of its operating profit came from abroad last fiscal year and it expects to boost that figure to 23 percent this year.

Mizuho has hired about 400 people locally for operations abroad over the past three years and will continue recruiting overseas, Hayashi said.

Mitsubishi UFJ, Sumitomo Mitsui and Mizuho trail only Standard Chartered Plc and HSBC Holdings Plc in rankings of syndicated loan arrangers in Asia this year, according to data compiled by Bloomberg. In 2009, Mitsubishi UFJ was the only Japanese bank in the top five.

Lending in Japan rose 0.8 percent in June from a year earlier and has failed to increase more than 1 percent since October 2009, central bank figures show. The average interest rate Japanese banks charge for new loans fell to 0.95 percent in May, close to a record low of 0.92 percent in February.

Sumitomo Mitsui Trust Holdings Inc., the country’s fourth-biggest bank by market value, plans to expand overseas loans by 32 percent this year as it buys assets from European lenders and provides infrastructure finance in Asia, Shigeki Tanaka, general manager of wholesale business planning, said last month.

Mizuho said in June it agreed to buy the Brazilian unit of WestLB, now known as Portigon AG, to tap demand for infrastructure-related financing. The Japanese bank bought 15 percent of Joint-Stock Commercial Bank for Foreign Trade of Vietnam for about $570 million last year.

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