(Dec 29): Mizuho Financial Group Inc is bolstering efforts to expand its corporate and institutional banking business in Europe and Asia, pursuing a growth strategy that’s diverging from its Japanese peers.
Japan’s third-largest bank plans to replicate a US expansion of that division into these other regions, chief executive officer Masahiro Kihara said in an interview.
Kihara plans to leverage the bank’s expertise in facilitating cross-border transactions for corporate and institutional clients — a strategy that contrasts with Mitsubishi UFJ Financial Group Inc and Sumitomo Mitsui Financial Group Inc, which have spent billions acquiring stakes in commercial lenders and financial firms to tap Asia’s growing middle class.
Mizuho Americas’s gross profit more than doubled in five years to US$5.2 billion for the year ended in March, driven by both investment banking and markets operations.
Kihara, who took over the top job at the bank in 2022, said Mizuho’s US operations cover 80-85% of investment banking products available in the industry. It’s mostly relied on organic growth, apart from a deal to buy boutique investment bank Greenhill & Co in 2023.
He said the bank will pursue growth beyond the US by securing business related to M&A advisory, while providing financing and risk hedging products. The bank has promoted Suneel Bakhshi to deputy president to boost collaboration across regions.
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Kihara said Mizuho is “going on the offensive” in Europe after having restructured the region’s unprofitable businesses in recent years. The company will utilise Greenhill and Augusta & Co, a boutique advisory firm specialising in renewable energy it bought earlier this year, he said.
Mizuho also said it’s acquiring Avendus Capital Pvt earlier this month, as it hopes to take advantage of the Mumbai-based investment bank’s strong connections with India’s domestic companies.
In Asia, Kihara sees more immediate growth in transaction banking, which handles corporate clients’ daily cash management including billing and payment as well as short-term finance.
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Unlike its Japanese rivals, Mizuho has “no intention” to own and run asset management companies overseas. Kihara won’t rule out buying minority stakes in firms that offer attractive investment products, he added.
In Japan, Mizuho is trying to beef up its retail business, which is gaining importance as domestic interest rates rise and customer deposits are seen as a cheap funding source.
As part of its consumer drive, the bank has partnered with Rakuten Group Inc in online brokerage and credit card services. Kihara also said Mizuho will target small businesses by reducing transaction fees — a segment traditionally avoided by major banks due to its labour-intensive nature.
In July, Mizuho agreed to acquire a majority stake in Upsider Holdings Inc, a startup specialising in an artificial intelligence-driven (AI) credit model for small-business financing. Kihara said that leveraging AI will enable the bank to scale this category more efficiently.
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