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Japan-Update

Mizuho taps brokerage boss to lead group beyond banking

Unusual pick highlights need for fresh focus amid lackluster earnings

Mizuho Securities President Tatsufumi Sakai, right, and Mizuho Financial Group President Yasuhiro Sato at a news conference in Tokyo on Jan. 15.

TOKYO -- Mizuho Financial Group's appointment of its securities chief as group president underscores a renewed focus on that business as mainstay lending operations struggle under meager margins due to ultra-low interest rates in Japan.

Tatsufumi Sakai, president of Mizuho Securities, will replace Yasuhiro Sato as group president as of April 1, the parent said Monday. Sakai will double as group CEO, and Sato will become chairman with no representative rights, the board decided in a special meeting the same day.

"We will aim to be a strong, tenacious financial group that can be counted on more than ever," Sakai told reporters.

Since its creation in 2000 through a merger of three banking groups, Mizuho Financial Group had never named a head of the securities business as group chief. And this marks the first time that outside directors alone nominated the group chief.

"We see major significance in having the securities unit president head the group," said Sato. "The securities business will be a key in charting a growth path going forward."

Six and a half years have already passed since Sato took the helm shortly after a major system disruption due to the March 2011 earthquake and tsunami.

Mizuho Financial Group relies more on traditional banking operations compared to rival megabanks in Japan, thus its profitability is weaker.

Sato has also led governance reform after the group was found in 2013 to have lent money to organized crime groups. In November 2017, he announced plans to downsize staff by about 25%, or 19,000, over the next decade. "We have been able to clear up negative legacies mostly," he said.

As ultralow interest rates linked to the Bank of Japan's negative rate policy squeeze bank earnings in Japan, Mizuho Financial Group intends to lessen its dependence on mainstay lending operations and sharpen its focus on the securities business.

So far, Mizuho's securities business has not been as strong as those of its megabank peers: Mitsubishi UFJ Financial Group has teamed up with U.S. company Morgan Stanley, and Sumitomo Mitsui Financial Group has acquired the successor to Nikko Securities, which had long been one of Japan's leading securities companies.

(Nikkei)

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