Business / Corporate

Mizuho, Sumitomo Mitsui Trust eye merging asset management banking arms

Kyodo

Mizuho Financial Group Inc. and Sumitomo Mitsui Trust Holdings Inc. are discussing integrating their asset management banking businesses, sources said Wednesday.

The integration across their traditional keiretsu groupings is aimed at boosting the scale of the business to curb costs and implement streamlining at a time when the Bank of Japan’s negative interest rate policy has put pressure on profits.

As the BOJ’s aggressive monetary easing is expected to continue for the time being, moves to realign business could also accelerate among other major banking groups.

At the heart of the talks between the two groups are Trust & Custody Services Bank, 54 percent owned by Mizuho, and Japan Trustee Services Bank, 67 percent owned by Sumitomo Mitsui Trust.

Although details have yet to be worked out, Mizuho and Sumitomo Mitsui Trust aim to eventually merge the two banks, according to the sources.

One idea being floated is initially bringing the two banks under a holding company, the sources said, adding that Mizuho and Sumitomo Mitsui Trust are expected to announce details as early as at the end of March.

The combined outstanding balance of assets under their management at the end of Sept. 30 last year came to around ¥380 trillion ($3.37 trillion), more than double the size of assets under management by rival Mitsubishi UFJ Financial Group Inc.

Mizuho and Sumitomo Mitsui Trust have increased collaboration over the years by, for example, setting up a securities-related joint venture in 2008.

Mizuho and Sumitomo Mitsui Trust released statements saying they are considering various options to further enhance their business efficiency but nothing had been decided.