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S'pore pivot in Mizuho Bank's Asia expansion
[SINGAPORE] Japan's Mizuho Bank is ramping up its overseas expansion, with Singapore playing a pivotal role as the lender steps up its offerings and opens up more branches in the region to get closer to customers.
To realise its Asia strategy, the bank will increase its 600-strong staff in its Singapore office by about 50 per cent over the next few years, said Takuya Ito, Mizuho Bank's general manager for Asia & Oceania division.
One of Japan's three mega banks, Mizuho's presence in Singapore goes back 40 years; initially, like its peers which venture overseas, it was to serve Japanese companies.
"It's still the case, but over the past decade, we've been doing business with Singapore corporates as well; a lot has been in real estate financing and infrastructure, energy and power stations," said Mr Ito in a recent interview with The Business Times.
"As Singapore companies go out into regional countries, and vice versa, we cover those cross-border transactions as well," he said.
Japanese banks have accelerated their expansion strategy in the region post-2007-2008 global financial crisis, which reinforced Asia as the engine of global growth. The global strategy of The Bank of Tokyo-Mitsubishi UFJ, Japan's biggest bank, also focuses on Asia.
In a major revamp in 2011, Mizuho established Singapore as the regional hub to oversee its business in Asean, India and Australia.
Under this mandate, Singapore spearheaded the opening of new branches in Chennai and Bangalore, a new unit in Kuala Lumpur and representative offices in Yangon and Phnom Penh.
Mizuho recently received approval to open a branch in Ahmedabad, the largest city in the western Indian state of Gujarat, and will soon be opening another branch in Thailand.
International profits make up about one-third of group total. Asia contributes 50 per cent to international profit. Profit from Asean, India and Australia is about 25 per cent.
The target is to increase the profit from Asean, India and Australia to 30-35 per cent within two years, said Mr Ito.
The Singapore bank operation makes up 15-20 per cent of the Asean, India and Australia division.
Over the past decade, Mizuho Singapore's total assets more than tripled, from US$8 billion to US$37 billion as at March 31, 2014. Over the same period, net operating profits jumped fivefold to US$178 million while the bank's headcount doubled to more than 600 from 300 in 2002.
The bank has been involved in some of the largest deals here, including financing Thai Beverage's purchase of Fraser and Neave in 2012.
Mizuho Singapore has more than 2,000 corporate customers, including about 700 non-Japanese companies.
The Singapore office is also the regional hub for treasury, project finance, trade finance, structured finance, syndication and advisory. The bank is opening a new transaction banking unit next month to capture more trade-flow business.
The bank works with its affiliate, Mizuho Securities, to provide investment banking to customers.
In addition, a number of regional corporate functions are housed here, including credit, risk management, operation planning, compliance, internal audit, research as well as talent development.
With the ambitious strategy for the region, the bank is moving into much bigger offices next year. In April, it will relocate to Asia Square Tower 2, where it will be the anchor tenant with 100,000 square feet of office space.
The bigger premises will allow the bank to cater to an expanded headcount of 900, Mr Ito said. "Not immediately, but in 3-5 years," he added.
Won't it be a challenge to hire people given Singapore's tight labour market?
"We believe in investing in young people and upgrading existing staff," he said.
This year, Mizuho hired 24 graduates from the local universities. The bank supports the National University of Singapore Business School with bursaries via an endowment fund.