Mizuho to continue unloading client shares

December 27, 2017

Tokyo- Mizuho Financial Group Inc. will keep selling shares of clients and partners, including regional banks, Yasuhiro Sato, president and group chief executive officer of the major Japanese banking group, said in a recent interview.

Such shares owned for noninvestment purposes make up a sizable amount of assets that need to be put up for review in order to reduce risk assets, Sato said.

Mizuho plans to sell such shares worth 550 billion yen at book value in a four-year period to the end of March 2019.

The group will continue to reduce its holdings of such shares even after the end of the four-year period, Sato said.

Major Japanese banks have been reducing such shareholdings to prepare for new international capital adequacy rules that will boost the risk weighting on such shares by 2.5 times.

An increase in risk assets leads to a fall in the capital adequacy ratio, an indicator of banks' financial health.

Mizuho, which owned such shares worth some 2 trillion yen at book value at the end of March 2015, sold 330 billion yen worth of them by the end of September.

The group is expected to "be able to achieve" the four-year goal, Sato said.

Shares of regional banks with deep historical ties are "no exception" to the effort, he said.

"The release of regional bank shares held by megabanks may help promote mergers," he said, indicating a possibility that the sale will accelerate the industry's realignment. Jiji Press