Mizuho Hires for Wall Street Bond Push as Ex-RBS Staff Settle In

  • Mizuho seeks to ‘capture’ more opportunities in U.S. bonds
  • Japan banks hire to boost U.S. fees as domestic yields drop

Mizuho Financial Group Inc. is hiring for bond underwriting on Wall Street, emboldened by winning a bigger slice in managing deals since adding bankers from Royal Bank of Scotland Group Plc in 2015.

Mizuho managed $31.7 billion in U.S. investment-grade note offerings in the fiscal year to March 31, excluding self-led deals, making it the 10th-biggest underwriter in the period, five places higher than a year earlier, according to data compiled by Bloomberg. Japan’s third-biggest lender by market value said in April last year that it hired bankers from RBS to join its underwriting business in the U.S. after Mizuho’s purchase of the U.K. firm’s loan assets in North America.

“Our debt capital markets business in the U.S. is expanding strongly and we want to capture upcoming opportunities,” Yuzo Kanamori, an executive officer at Mizuho Securities Co. and head of global investment banking said in an interview in Tokyo. Mizuho plans to boost staff at its U.S. securities unit this fiscal year by about 50 to 60 people, and that will include hires for its underwriting business, he said, declining to specify further.

Mizuho group Chief Executive Officer Yasuhiro Sato said in May that the hires from RBS helped boost the Japanese bank’s presence in the U.S. market “massively,” and the firm set a target in May of being “10th or above” in managing investment-grade bond offerings by U.S. companies. Mizuho and its domestic peers Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. are expanding their underwriting operations in the U.S., as they seek to boost fees and income overseas while margins on loans at home are near zero.

“I was in New York on a business trip last month, and people now don’t use the term ex-RBS,” according to Kanamori. “We’re moving to the next stage. We’ve got extremely good, capable, team workers with us that are highly motivated.”

Mizuho has helped finance some of the largest global acquisitions in the last 12 months with loans, and then has been tapped as an underwriter for re-financing the deals with bonds or equity. The Japanese bank co-managed Teva Pharmaceutical Industries Ltd. sale of dollar and euro bonds last week, and share offering in December to help fund the Israeli drugmaker’s $40.5 billion-acquisition of Allergan Plc’s generic-drug business.

Mizuho’s Strategy

Kanamori said while Mizuho is hiring for its fixed-income team in the U.S., even as some banks on Wall Street are making cuts, it is doing so cautiously and keeping an eye on market developments. Mizuho’s bond operations there are still “under construction,” and the additional returns it can generate by investing more are likely different from “bulge” banks, he said.

The Japanese bank also plans to boost staff “a little” in its capital markets businesses in Asia and Europe as it strengthens its cross-border underwriting operations, according to Kanamori. Mizuho was a co-lead manager on dollar-bond sales by Korea’s Shinhan Bank and China’s Sinopec Group Overseas Development Ltd. earlier this year.

“Mizuho’s strategy is to make up for the potentially narrower net interest margins by using its balance sheet to generate fees,”said Michael Makdad, a banking analyst in Tokyo at Haitong International Securities Group. “There will be a continuing movement of Japanese assets into USD bonds. If Mizuho is able to leverage its large balance sheet and that trend to boost its securities fees overseas, it’s a positive.”

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