Mizuho’s new CEO plans to expand US capital markets business

(Bloomberg) – Mizuho Financial Group Inc. is doubling down on its bets in U.S. financial markets as it seeks to expand into more lucrative areas, according to its new chief executive.

The company wants to hire bankers to expand its business with lower-quality companies and leveraged buyout financing, where returns are expected to be higher, Masahiro Kihara, CEO of Japan’s third-largest bank, said in an interview. . There will be proper risk management for these businesses, he said.

The United States is “a super important market. It is the second largest revenue and profit generator after Japan,” Kihara said. “There’s more room for what we can do in America.”

Faced with years of low interest rates and sluggish economic growth at home, Japanese banks have explored overseas markets to boost their profits. For Mizuho, ​​one such strategic area has been the U.S. debt capital market, which boosted its bottom line during the pandemic-induced funding boom.

Of the three Japanese megabanks, Mizuho has been the most aggressive in growing the lower-grade bond business in the United States. The bank ranked 12th as an underwriter for the country’s high-yield corporate bonds last year, followed by Mitsubishi UFJ Financial Group Inc. at 16th and Sumitomo Mitsui Financial Group Inc. at 21st, according to data compiled by Bloomberg.

“By working with these clients, we also hope to win M&A advisory and ECM contracts,” Kihara said.

Kihara, 56, was promoted to the top job in February after his predecessor resigned to take responsibility for a series of computer system problems. In addition to fixing its internal control and IT systems, its mission is to catch up with the bank’s better-capitalized megabank rivals, which have stepped up in emerging economies across Asia by buying up banks and other financial companies over the past few years. last years.

Investments

Kihara said he was not interested in buying traditional commercial banks in Asia. Instead, Mizuho will pursue opportunities in digital finance, citing deals like February’s acquisition of a 10% stake in Tonik Financial Pte., which operates a digital bank in the Philippines.

Mizuho also plans to spend 50 billion yen ($390 million) over the next five years to invest in its client companies’ carbon transition efforts, buying into their businesses, he said.

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