Mizuho Financial Group Explained

Mizuho Financial Group, Inc.
Native Name:株式会社みずほフィナンシャルグループ
Native Name Lang:ja
Romanized Name:Kabushiki gaisha Mizuho Finansharu Gurūpu
Type:Public (Kabushiki gaisha)
Hq Location:Otemachi Tower
Location City:Marunouchi, Chiyoda, Tokyo
Location Country:Japan
Key People:Seiji Imai

Masahiro Kihara
(President & CEO)
Revenue Year:2022
Income Year:2022
Net Income Year:2022
Assets Year:2022
Equity Year:2022
Num Employees:52,420 (March 2022)
Footnotes:[1]

The, known from 2000 to 2003 as Mizuho Holdings and abbreviated as MHFG or simply Mizuho, is a banking holding company headquartered in the Ōtemachi district of Chiyoda, Tokyo, Japan. The group was formed in 2000-2002 by merger of Dai-Ichi Kangyo Bank, Fuji Bank, and Industrial Bank of Japan. The name literally means "abundant rice" in Japanese and "harvest" in the figurative sense.

Mizuho Financial Group is the parent holding of Mizuho Bank, Mizuho Trust & Banking, Mizuho Securities, and Mizuho Capital, and the majority owner of Asset Management One. The group offers a range of financial services, including banking, securities, trust and asset management services, employing more than 59,000 people[2] throughout 880 offices.[3] It is listed on the Tokyo Stock Exchange—where it is a constituent of the Nikkei 225 and TOPIX Core30 indices—and in the New York Stock Exchange in the form of American depositary receipts.

Upon its founding, Mizuho was the largest bank in the world by assets.[4] Following further consolidation, it has become the third-largest of Japan's so-called megabanks with total assets of $1.9 trillion at end-March 2023, behind Mitsubishi UFJ Financial Group ($2.9 trillion) and SMBC Group ($2.0 trillion).[5] Mizuho was the 15th largest banking institution in the world by total assets as of December 2018,[6] and the 90th largest company in the world according to Forbes rankings as of May 2017.[7] It has been consistently listed as a systemically important bank by the Financial Stability Board.

History

See also: Dai-Ichi Bank, Nippon Kangyo Bank, Yasuda / Fuji Bank, Industrial Bank of Japan and Dai-Ichi Kangyo Bank.

The history of the banks that formed Mizuho combines multiple threads of Japanese financial history, going back to the early Meiji era and particularly the establishment in 1873 of Dai-Ichi Bank, Japan's first modern bank and joint-stock company led by Shibusawa Eiichi, if not even earlier with the foundation of trading house Yasuda-ya in 1864. In addition to Dai-Ichi (whose name literally means "number one"), Mizuho also incorporates several of the subsequent National Banks in Meiji Japan which were numbered in accordance with their chronological date of establishment until 1880:

The group's predecessors also include Nippon Kangyo Bank (est. 1897) and Industrial Bank of Japan (est. 1902), two institutions founded as policy banks in the Meiji era and converted into commercial banks after World War II.

Founding merger

Mizuho was established in 2000 as Mizuho Holdings, Inc. by the merger of Dai-Ichi Kangyo Bank, Fuji Bank, and the Industrial Bank of Japan, first announced in 1999.[8] [9] [10] It was the first financial holding company structure created among major Japanese banks.[11]

On, DKB, Fuji and IBJ were officially and legally combined into two banks,[12] Mizuho Bank, Ltd. and Mizuho Corporate Bank, Ltd.,[13] [14] through a split and merger process reorganizing the three legacy banks.[15] Initially Mizuho traded under the ticker symbol MHHD on the London Stock Exchange.[16] Mizuho Corporate Bank focused on large corporations, financial institutions and public sector entities in Japan and overseas,[17] whereas Mizuho Bank focused on individuals and small and medium-sized companies in Japan.[18]

The merger resulted in the world's first trillion-dollar banking group, with its $1.2 trillion in assets, surpassing the next largest bank by about $480 billion. The move has been considered to have formed one of the first "mega-institutions" in the financial industry, beginning a trend in the industry of large-scale bank mergers referred to in Japan as the consolidation movement during the 2000s.[19] While other mega-institutions were composed of one major player and several minor ones, Mizuho was composed of three relatively equal institutions in terms of their size and influence.[20] It remained the largest mega-bank in the world until 2005.[12]

The name "Mizuho" means "new, bountiful, and rich harvest of rice" in Japanese.[21] The original structure saw the founding of the Mizuho Bank, focusing on individuals and SMEs, and the Mizuho Corporate Bank, which focuses on corporate entities.[22] The initial strategy of the company was to expand its lending operations with individuals and SMEs, and begin to offer fee-based services including securitizations, merger and acquisitions support, security-based investment banking, and syndicated loans. At the time, Mizuho controlled about 50% of the syndicated loans market.[23] Mizuho also launched one of the first Internet-based securities products in 2000.[24]

In 2003, Mizuho Financial Group, Inc. took over the operations of Mizuho Holdings.[12] On 1 October 2005, all subsidiaries of Mizuho Holdings were transferred to the direct control of Mizuho Financial Group.[12] Mizuho Holdings, no longer a bank holding company, was then renamed Mizuho Financial Strategy, which now focuses on providing advisory services.[25] Mizuho Financial Group was in turn listed on the New York Stock Exchange under the stock symbol MFG in 2006.[26]

Subsequent development

Mizuho Corporate Bank engaged in steady expansion overseas, opening twenty overseas offices between 2005 and 2010,[27] particularly in China, as well as in the Americas, Europe and Middle East. In 2006, Mizuho Corporate Bank became the first Japanese bank to obtain financial holding company status in the U.S.,[28] and Mizuho Financial Group listed its ADRs on the New York Stock Exchange.[29]

Mizuho, through its operations in New York, became involved in the subprime mortgage crisis and lost seven billion dollars on the sale of collateralized debt obligations backed by subprime mortgages. It is the Asian bank which suffered the most losses due to the crisis.[30] In 2012 Mizuho Financial Group acquired 100% of the assets from the Brazilian bank Banco WestLB do Brasil S.A.[31]

On, the group structure was simplified by a merger of Mizuho Bank and Mizuho Corporate Bank into a single banking entity that retained the name Mizuho Bank.[32]

In 2014 the company underwent a board of directors reform to further streamline its corporate culture into a more of a single identity, although its original board founded in 2002 was consistent with Japanese banking protocols. In 2016 they opened their global transactions banking headquarters in Singapore, and have offices for this unit in China, Hong Kong, Tokyo, London, and New York City.[33] That year they also began a partnership with Cognizant, to develop block-chain methods of securing the banks private records.[34]

Divisions

Mizuho splits its business into four distinct divisions, on a global basis:

Retail Group

Mizuho is active in retail banking with 515 branches and over 11,000 automated teller machines (ATMs).[35] Mizuho Bank is the only bank, other than Japan Post Bank, to have branches in every prefecture in Japan.[36] It serves over 26 million Japanese households,[37] 90,000 SME customers, 2500 corporations,[38] and retail brokerage clients under the name Mizuho Investors Securities nationwide, with $114 billion in retail customer assets under its management as of 2016.[39]

Global Corporate Group

Mizuho predecessors, the Dai-Ichi Kangyo Bank (DKB), the Fuji Bank (Fuji) and the Industrial Bank of Japan (IBJ), had great control over many Japanese companies through keiretsu system. The three banks led the DKB Group, Fuyo Group and the IBJ Group respectively. The Fuyo Group traces its history as far back as the old Yasuda zaibatsu. Even now, seven out of ten companies listed on the Tokyo Stock Exchange have dealings with Mizuho.[40]

Global wealth and asset management

Asset Management One manages a number of ETFs which are listed in Japan, but some of these ETFs are very illiquid because no market maker was appointed. For example, One ETF Gold (1683:JP) frequently trades at a discount of more than 10% to the NAV.[41] [42]

Strategy affiliates

Sponsorship

Mizuho is a sponsor of the Tokyo International Marathon[43] and the 2020 Olympic Games and 2020 Paralympic Games.[44]

Notable employees

Controversies

In September 2013, a routine regulatory control unveiled that Mizuho enabled loans of up to $1.9 million to the yakuza (Japanese mafia). It also appeared that loans to the mob had been approved through its affiliate credit company Orient Corp. This scandal led to the resignation of the group's CEO Takashi Tsukamoto.[45] [46]

In December 2019, a report named Mizuho as the top private lender to coal developers between January 2017 and September 2019.[47] In March 2020, Japanese NGO Kiko Network filed the first climate related shareholder resolution with a Japanese company proposing Mizuho align its investments with the goals of the Paris Agreement,[48] which was followed by investor support for the resolution.[49] In response, Mizuho has agreed not to finance any further coal projects, and to end all existing loans for coal projects by the year 2050.[50]

See also

External links

Notes and References

  1. Web site: Consolidated Financial Statements for Fiscal 2022 . Mizhuo Group . 10 July 2023.
  2. Web site: Mizuho Financial on the Forbes Top Regarded Companies List. Forbes.com.
  3. Web site: Bank employee plunges to death in City of London. Gregory. Walton. 27 November 2015. Telegraph.co.uk.
  4. Web site: Nikkei at 16-year low. David. Litterick. 23 July 2001. Telegraph.co.uk.
  5. Web site: S&P Global . Japanese megabanks retain top slots in ranking even as total assets drop . . Yuzo Yamaguchi & Mohammad Taqi.
  6. http://www.relbanks.com/worlds-top-banks/assets "The Top 100 Banks in the World 2016"
  7. https://www.forbes.com/companies/mizuho-financial/ "Forbes The World’s Biggest Public Companies 2016 RANKING."
  8. News: A super-bank in the making. The Japan Times.
  9. News: History of Mizuho . The Oriental Economist. 1966. 574.
  10. Book: Newall, Sir Paul. Japan and the City of London. 17 December 2013. A&C Black. 9781780939537. Google Books.
  11. Book: Asia's Banking CEOs: The Future of Finance in Asia . Peter Hoflich . 14 . Wiley . 2008.
  12. Book: Padmalatha, Suresh. Management Of Banking And Financial Services, 2/E. 1 September 2011. Pearson Education India. 9788131730942. Google Books.
  13. Book: Tan, Chwee Huat. Dictionary of Asia Pacific Business Terms. 1 June 2018. NUS Press. 9789971692759. Google Books.
  14. Book: Berger, Allen N.. The Oxford Handbook of Banking. June 1, 2018. Oxford University Press. June 1, 2018. Google Books. 9780199688500.
  15. Web site: Japan's Mizuho Bank on verge of replacing crash-prone system- Nikkei Asian Review . June 1, 2018 . https://web.archive.org/web/20170726183552/http://asia.nikkei.com/Japan-Update/Japan-s-Mizuho-Bank-on-verge-of-replacing-crash-prone-system . July 26, 2017 . dead . mdy-all .
  16. Web site: FE Investegate -Mizuho Holdings Inc Announcements - Mizuho Holdings Inc: Delisting of Stock Timetable. Investegate.co.uk.
  17. Book: Tan, Chwee Huat. Dictionary of Asia Pacific Business Terms. June 1, 2018. NUS Press. June 1, 2018. Google Books. 9789971692759.
  18. Book: CEOs as Leaders and Strategy Designers: Explaining the Success of Spanish Banks: Explaining the Success of Spanish Banks. Kimio. Kase. Tanguy. Jacopin. December 14, 2007. Springer. June 1, 2018. Google Books. 9780230590465.
  19. Book: Introduction to Business. Julian. Gaspar. Leonard. Bierman. James. Kolari. Richard. Hise. L. Murphy. Smith. 18 February 2005. Cengage Learning. 9781111808976. Google Books.
  20. Book: Mallin, Christine A.. Handbook on Corporate Governance in Financial Institutions. 27 May 2016. Edward Elgar Publishing. 9781784711795. Google Books.
  21. Book: Grosse, Robert E.. The Future of Global Financial Services. 9 February 2009. John Wiley & Sons. 9781405142403. Google Books.
  22. Book: Tan, Chwee Huat. Dictionary of Asia Pacific Business Terms. 1 June 2018. NUS Press. 9789971692759. Google Books.
  23. Book: Winning in Asia, Japanese Style: Market and Nonmarket Strategies for Success. V.. Aggarwal. S.. Urata. 30 April 2016. Springer. 9781137109262. Google Books.
  24. Web site: みずほフィナンシャルグループ、インターネット専業証券を本年中に設立. internet.watch.impress.co.jp.
  25. Web site: Mizuho Financial Strategy Co., Ltd.: Private Company Information - Bloomberg. 20 May 2023 . Bloomberg.com.
  26. Web site: Mizuho: From Megabank To Global Financial Consultant. The First. Mover. 31 March 2017. Seekingalpha.com.
  27. Web site: News Release(Former Mizuho Corporate Bank). Mizuhobank.com. June 1, 2018.
  28. Web site: Financial Holding Company status obtained in the U.S.. Mizuhobank.com. 1 June 2018.
  29. Web site: Mizuho Financial Group English website address has been changed. Mizuho-fg.co.jp. June 1, 2018.
  30. News: Mizuho $7 Billion Loss Turned on Toxic Aardvark Made in America . Bloomberg. 29 October 2008 . 29 October 2008 . Finbarr . Flynn .
  31. News: Mizuho agrees to buy WestLB Brazil unit for $380 million. Taiga. Uranaka. 20 June 2012. Reuters.
  32. Web site: Mizuho Financial Group English website address has been changed. . Mizuho Financial Group . June 1, 2018.
  33. News: Mizuho Seeks $100 Billion From Overseas Transaction Banking. Bloomberg.com. 8 August 2017. Bloomberg.
  34. News: Mizuho financial group partners enters pact with Cognizant. Times of India.
  35. Web site: Mizuho Bank gears up for new core banking system go-live. Bankingtech.com. 16 November 2016.
  36. Book: Cybriwsky, Roman. Historical Dictionary of Tokyo. 18 February 2011. Scarecrow Press. 9780810874893. Google Books.
  37. Web site: Mizuho Bank, LTD. Transforms online and mobile banking systems . 1 June 2018 . https://web.archive.org/web/20160321235813/http://www-03.ibm.com/software/businesscasestudies/us/en/corp?synkey=V574977B29777U28 . 21 March 2016 . dead .
  38. Web site: Mida, Mizuho units team up - Business News - The Star Online. Thestar.com.my.
  39. News: Mizuho Seeks to Challenge Nomura as Japan's Top Equity Firm. 19 October 2016. Bloomberg.com.
  40. http://www.mizuho-fg.co.jp/english/pdf/briefing/20050307clsa.pdf IR Presentation at “CLSA Japan Forum 2005”
  41. Web site: 1683 Quote - One ETF Gold Fund. Bloomberg.com.
  42. Web site: Listed Issues.
  43. Web site: Tokyo Will Be Added as Sixth Major Marathon. 2 November 2012. The New York Times.
  44. Web site: Mizuho and SMFG join Tokyo 2020 Gold Partner Programme｜The Tokyo Organising Committee of the Olympic and Paralympic Games. Tokyo2020.jp.
  45. News: Mizuho has more loans to the mob. Otake. Tomoko. 13 November 2013. The Japan Times. 19 July 2018.
  46. News: Mizuho chairman to stand down over yakuza loans scandal. https://ghostarchive.org/archive/20221210/https://www.ft.com/content/c4656f74-6e12-11e3-8dff-00144feabdc0 . 10 December 2022 . subscription. McLannahan. Ben. 26 December 2013. Financial Times. 19 July 2018.
  47. Web site: Takahashi . Ryusei . 7 December 2019 . Japan's mega-banks named as world's biggest lenders for new coal plants . 30 January 2023 . The Japan Times . en-US.
  48. Web site: 16 June 2020 . Major shareholder to support first ever climate resolution in Japan . 30 January 2023 . Fossil Free Japan . en-US.
  49. News: Investors line up against Mizuho support for coal. Reuters. 6 April 2020. Sheldrick. Aaron.
  50. News: 15 April 2020 . Mizuho to stop lending to new coal power projects . en . Reuters . 10 July 2023 . "Mizuho Financial Group will stop financing new coal power projects and end all loans for coal by 2050, bowing to pressure from a group of leading investors for climate concessions ahead of the bank’s annual shareholders’ meeting in June.".

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