Mizuho Corporate Bank plans to sign separate accords with two major South Korean financial institutions later this month to tie up in investment banking, sources familiar with the matter said Sunday.
The two South Korean institutions are Shinhan Financial Group — South Korea’s second-largest financial group, which has Shinhan Bank as its nucleus — and the South Korean government-affiliated Korea Development Bank.
Mizuho Corporate Bank, a core unit of Mizuho Financial Group Inc., is planning a capital participation in Shinhan Financial of about 10 billion yen, for an equity stake of less than 1 percent, the sources said. This will be the first full capital and business tie-up between major Japanese and South Korean financial institutions.
Mizuho Corporate Bank is in the final stages of separate talks with the two South Korean financial institutions in a bid to sign memorandums for alliances by the end of September, the sources said.
The Japanese bank, which has been faced with slow growth in fund demand among domestic customer companies, wants to expand business in Asia and other regions, the sources said, while Shinhan Financial and Korea Development Bank are seeking beachheads for full-fledged entry into the Japanese market.
Under the envisaged alliances, Mizuho Corporate Bank plans to introduce Japanese companies seeking to start business in South Korea to the South Korean partners, and Shinhan Bank and Korea Development Bank will reciprocate.
The two South Korean banks do business with major South Korean companies, such as Samsung Electronics Co., Hyundai Motor Co. and steel giant Posco.
Mizuho Corporate Bank will also cooperate with the two banks in helping Japanese and South Korean companies raise funds for overseas business and providing advice and loans in regard to mergers and acquisitions, the sources said.
The alliances will also cover personnel exchanges and joint development of derivative products to help companies avoid foreign exchange risks, they said.
Shinhan Bank, founded in 1982, has three Japanese branches in Tokyo, Osaka and Fukuoka, while Korea Development Bank, wholly owned by the South Korean government, was established in 1954 to help rebuild the country’s economy, which was devastated in the Korean War.
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