TOKYO – Mizuho Financial Group Inc <8411.T>, Japan's second-largest lender by assets, is looking to further expand overseas by acquiring either an Asian investment bank or a U.S. commercial bank over the next three years.
"Possible targets include an Asian investment bank, especially a bond market player," Mizuho President Yasuhiro Sato told reporters in Tokyo on Tuesday. "We also have to take a fresh look at the United States, whose economy, we expect, will become very strong in next five years."
Japanese banks such as Mizuho are leveraging their ample cash holdings to expand overseas to counter sluggish demand for loans at home. The retreat of European rivals in the wake of the debt crisis in the euro zone has also spurred lenders such as Mitsubishi UFJ Financial Group Inc <8306.T> and Sumitomo Mitsui Financial Group Inc <8316.T> to pick up assets around the world.
Mizuho is also looking to streamline its overall operations and cut costs by merging its international and corporate banking unit, Mizuho Corporate Bank, with its retail and small and medium enterprises unit Mizuho Bank in July.
It has said the merger and other group reorganization will cut costs by 30 billion yen ($319.83 million) and boost revenue by 60 billion yen over a three-year period.
Mizuho was created in 2000 by a merger of three banks, and its structure as a holding company with two core banking units has long been criticized as an inefficient way of splitting management duties among the three lenders.
Sato, who became CEO of Mizuho Financial in 2011, has been working to make the banking group more nimble and more cost-efficient in the face of tepid loan demand at home.
Sato said domestic lending is likely to remain flat or grow slightly over the next three years, while overseas loans are expected to increase.
Citing huge overseas bad loan problems suffered by Japanese banks in the past, Sato said his bank will stick to lending to blue chip firms abroad, even though loan interest margins tend to be thin for such borrowers.
He said Mizuho is trying to secure fatter profits by winning bond and share issuance and other investment banking business from these clients.
In its business plan for the three years starting in April announced on Tuesday, Mizuho said it aims to report a net profit of 550 billion yen for the year ending in March 2016. That's up 10 percent from the 500 billion yen forecast for the current financial year.
($1 = 93.8000 Japanese yen)
(Editing by Ryan Woo)