Mizuho Holdings Inc., the world’s largest banking group by assets, made a fresh start Monday as its three core banks merged into two — Mizuho Bank and Mizuho Corporate Bank.
Mizuho Corporate Bank serves major corporate clients, while Mizuho Bank caters to individual account holders and small and midsize companies.
Mizuho Holdings’ assets come to 160 trillion yen.
The launch of the new banks was overshadowed Monday by technical problems at most of Mizuho Bank’s 7,000 automated teller machines nationwide, preventing many customers from withdrawing or depositing cash.
The incident caused Mizuho Holdings’ stock price to fall 10,000 yen from Friday’s close to 292,000 yen, brokers said.
The banks, with a combined workforce of more than 32,000, boast an enormous client base. Mizuho Corporate Bank deals with 70 percent of the companies listed on the first section of the Tokyo Stock Exchange.
“Taking advantage of our overwhelming client base, we will aim to make this the bank that can provide the best services,” Mizuho Corporate Bank President Hiroshi Saito said at a ceremony marking the launch of the new lenders.
Mizuho Bank President Tadashi Kudo said, “The reorganization of the Mizuho group is aimed at helping us make a great leap forward as the financial group for the 21st century.”
Mizuho Bank has 30 million accounts, the most among all Japanese banks.
The creation of the banks was the product of a merger of three major financial institutions — Dai-Ichi Kangyo Bank, Fuji Bank and Industrial Bank of Japan.
With the reorganization of Mizuho Holdings, the nation’s banking sector is now represented by four major banking groups: Mitsubishi Tokyo Financial Group Inc., Sumitomo Mitsui Banking Corp., UFJ Holdings Inc. and Mizuho Holdings.
Fuji Bank Vice President Terunobu Maeda, who became president of Mizuho Holdings on Monday, said recently that the three member banks will join forces and “funnel 100 percent of our energy into serving our customers.”
But like other major financial groups in Japan, Mizuho Holdings is struggling under a mountain of nonperforming loans.
Mizuho Holdings is believed to have disposed of bad loans totaling 2 trillion yen for the last business year, causing it to post 720 billion yen in group net losses for the year ended Sunday.
It expects the amount of bad-loan writeoffs to fall sharply to 450 billion yen by the end of this business year. But Maeda expressed reluctance about having public funds funneled into the bank’s capital accounts.
Saito, a former IBJ executive, had a similar view.
“Although the disposal of bad loans is the most important issue for banks, an additional injection of public funds is unnecessary,” Saito told Kyodo News in a recent interview.
Kudo, a past Dai-Ichi Kangyo vice president, said: “We’ll actively use the Resolution and Collection Corp. and bulk sales to promptly improve the quality of our assets.”
Mizuho Holdings was formed in September 2000 through the integration of the three banks.
Its capital-adequacy ratio stood at 10.53 percent as of late September 2001, above the 8 percent minimum requirement set by the Bank for International Settlements.
For the last business year, however, it expects to post net losses of 720 billion yen and pretax losses of 1 trillion yen on revenues of 5.25 trillion yen.
S&P gives BBB, A-3
Standard & Poor’s Corp. said Monday it has given its BBB long-term and A-3 short-term counterparty credit ratings to newly created Mizuho Bank and Mizuho Corporate Bank, wholly owned subsidiaries of Mizuho Holdings Inc.
The two banks were formed Monday through the reorganization of Dai-Ichi Kangyo Bank, Fuji Bank and Industrial Bank of Japan.
Mizuho Bank and Mizuho Corporate Bank are the key entities in the Mizuho group, the largest of Japan’s five megabank groups. The two new banks have consolidated assets of 164 trillion yen.
Mizuho Holdings earlier said its credit costs for fiscal 2001, which ended Sunday, will amount to 2 trillion yen, approximately 2.3 times its core preprovision profits.
S&P said it expects the group’s credit costs to “largely wipe out or possibly exceed the group’s preprovision profits for at least the next two to three years.”
Meanwhile, Moody’s Investors Service Inc. said it assigned an A-3 long-term deposit rating, Prime-1 short-term deposit rating and E-plus bank financial strength rating to both Mizuho Bank and Mizuho Corporate Bank.
The ratings were based on their strong domestic operating franchises, Moody’s said, adding that the credit agency has “strong expectations of institutional support, especially for their depository obligations.”
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.