HONG KONG: Mizuho's pick for chief executive might be lost in translation. The smallest of Japan's so-called megabanks has named the head of its securities unit, Tatsufumi Sakai, to replace Yasuhiro Sato, who is becoming chairman. That sends an important, but easily garbled, message about priorities.
In Western finance, the corner-office occupant speaks volumes about strategic direction and risk appetite. The era of dealmakers and traders being in charge did not quite die with the financial crisis: former investment bankers steer Barclays , Deutsche Bank and UBS, for example. This generation, however, is clearly less gung-ho than former leaders such as Bob Diamond of Barclays or Anshu Jain at Deutsche.
Corporate Japan is different. Executives tend to move around more often as they ascend the ranks, so their loyalties are diffuse. Indeed, Sakai has run Mizuho Securities for less than two years. As well as holding other senior investment-banking roles, he has equally grappled with international banking and "group planning".
The choice does matter, though. The $50 billion institution is in an awkward place. It lacks the scale and international breadth of market leader Mitsubishi UFJ Financial Group . Nor can it rely on retail customers in the same way as Sumitomo Mitsui Financial Group. Returns are lacklustre at Mizuho: analysts expect a mere 6.5 percent return on equity this financial year, worse than MUFG's 6.8 percent or SMFG's 7.2 percent.
Mizuho works with 70 percent of Japan's listed companies, but rock-bottom interest rates mean it must translate this stellar client base into more high-paying mandates for bond sales, mergers and such. The group topped the Thomson Reuters league tables for Japanese debt deals last year, and is a powerhouse in loans, but ranked seventh in Japan-related M&A and fourth for equity capital markets. Sakai should be able to help Mizuho join the dots more effectively.
That is by no means his only challenge, though. He will be at the helm of an organisation built on three rival banks in need of greater unification. There is also the unfinished business of shedding 19,000 staff over a decade. In global banking, those sorts of tasks are a common language.
- Mizuho Financial Group, Japan's fourth-largest bank by market value, said on Jan. 15 that brokerage head Tatsufumi Sakai would become president and chief executive later this year. He replaces Yasuhiro Sato, who will become chairman.
- The 58-year-old Sakai is president and CEO of Mizuho Securities. He has worked for the group since joining as a graduate in 1984. He has previously held senior roles in international banking, investment banking and group planning.
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