Mizuho Financial Group Inc. will pay several hundred billion yen for North American loan and derivative assets of Royal Bank of Scotland Group, a source with knowledge of the discussions said.
The loans are to highly rated companies, which means Mizuho will buy them for close to their face value, said the source, without giving further details.
Following the transaction, Mizuho may add employees from RBS to strengthen its debt capital markets business, the source said.
Japan’s third-biggest bank by market value is taking advantage of a retreat by RBS that involves cutting the number of countries it operates in by two-thirds to 13, a person with knowledge of the matter said on Wednesday.
Banks from Japan are expanding their loan books abroad as near record-low interest rates curtail profitability from lending at home.
Purchasing the loans gives Mizuho a way to expand in the U.S. after Chief Executive Officer Yasuhiro Sato said in December that buying a regional bank there wouldn’t be viable. Mizuho is interested in commercial banks in Southeast Asia and India, Sato said in an interview.
Spokesmen for Mizuho and RBS declined to comment. Kyodo News reported on the transaction value earlier on Thursday.
Mizuho is among bidders considering an acquisition of San Miguel Corp.’s controlling stake in a Philippine bank, people with knowledge of the matter said this month.
Shares of Mizuho have gained about 8 percent this year.
RBS is selling the assets as part of a plan by Chief Executive Officer Ross McEwan to shrink global operations and return the bank to private ownership. The Edinburgh-based lender is set to outline details of the restructuring, code-named Project Brown, later Thursday as it reports earnings, a source said on Wednesday.
The bank plans to sell or wind down its businesses in markets including China, Hong Kong, Indonesia, Malaysia, South Korea, India and Thailand, the source said. It will retain trading operations in the U.K., the U.S. and Singapore, a sales team in Tokyo and coverage teams in nine Western European markets, according to the source.
McEwan, 57, has been cutting jobs and assets to bolster earnings while increasing the focus on U.K. consumer banking. The bank may post its seventh consecutive annual loss since the financial crisis as it writes down the value of its U.S. consumer unit, according to estimates compiled by Bloomberg.
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