Mizuho to avoid flashy deals in hunt for stake targets

By Taiga Uranaka and Taro Fuse
A man is reflected on an advertisement board of Mizuho Financial Group's Mizuho Bank in Tokyo January 30, 2014. REUTERS/Yuya Shino

By Taiga Uranaka and Taro Fuse

TOKYO (Reuters) - The core unit of Mizuho Financial Group Inc <8411.T> is talking to several Asian banks about investing in their operations, a top executive said, but Japan's second-largest lender by assets is unlikely to make the sort of flashy deals like those done recently by its rivals.

In contrast to aggressive moves by the other two of Japan's top three banks, Mizuho has kept a relatively low-key approach to acquisitions recently.

Rival Mitsubishi UFJ Financial Group <8306.T> bought a 72 percent stake in Bank of Ayudhya Pcl , Thailand's fifth-largest lender in December for just over $5 billion (2.96 billion pounds). In 2008, it bought out UnionBanCal Corp, the holding company for California-based UnionBank, and paid $9 billion for a 20 percent stake in Morgan Stanley .

In March, Sumitomo Mitsui Financial Group <8316.> completed the acquisition of a 40 percent stake in Indonesia's seventh-biggest bank, BTPN , in a deal valued at $1.5 billion.

MUFG and SMFG also spent billions of dollars snapping up assets like project finance loans and aircraft leasing operations in recent years.

"We have already been having various dialogues with targets," Nobuhide Hayashi, president of Mizuho Bank, said in an interview. "We are preparing ourselves so that we can invest capital when targets become ready."

Hayashi declined to discuss specific deals the bank is considering, but sources previously told Reuters the bank has approached ANZ to buy its 39.2 percent stake in PT Bank Pan Indonesia Tbk (Panin) , which is valued at around $570 million.

Hayashi, who took the reins at Mizuho Financial's commercial banking unit in April, said the bank will stick to strategic investments in commercial banks to boost client-oriented transactions and is not interested in buying loan assets from overseas rivals.

"We are not going to do asset finance-type of business," he said. "We are not going to do aircraft finance."

Hayashi, 57, who rose through ranks mainly in the bank's overseas operations, took over the top job from Yasuhiro Sato, who stepped down to concentrate on his job as CEO of Mizuho Financial Group after the lender came under fierce public criticism following a scandal involving loans to organised crime members.

Hayashi said Mizuho, created by a merger of three rivals about a decade ago, needs to change its corporate ways to avoid such problems in the future.

"Our efforts fell short where all employees take the initiative and raise their voice when something is wrong," he said.

On the domestic front, he said the bank will take more risks in expanding lending to small and medium-sized businesses, where a significant pickup in loan demand has yet to be seen.

"It's not that we take up anything, but we will actively provide loans to those with a convincing business model," he said.

(Editing by Matt Driskill)

By using Yahoo you agree that Yahoo and partners may use Cookies for personalisation and other purposes