Mizuho Financial Group Inc will incorporate and expand in China, aiming to
win more business from Japanese manufacturers who have tripled investments in
the world's fastest-growing major economy.
"A domestic charter may make
it easier to get permission to expand market and investment-banking operations,"
Masahiko Yano, Mizuho Corporate Bank Ltd's joint general manager for Asia, said
in a Hong Kong interview on November 24. The bank will apply as early as this
month, he added.
Mizuho, Japan's second-biggest financial firm, must
broaden operations in China to meet corporate banking head Hiroshi Saito's goal
of doubling to 40 per cent the overseas share of total revenue.
"Japanese
banks are chasing the nation's manufacturers, who have been expanding in Asia
for years," said Atsuto Sawakami, who manages US$1.7 billion as president of
Sawakami Asset Management Inc.
Seventy per cent of nearly 20,000 Japanese
companies operating in China plan expansion within two years, according to the
Japan External Trade Organization, which said Japanese direct investment in
China rose to US$6.6 billion in 2005 from US$2.2 billion five years
earlier.
"We plan to earn more fees by arranging structured and project
financing, which are among our strongest businesses," Yano said. Mizuho aims to
expand lending to Japanese and local companies in China; it has no immediate
plan to offer retail banking, he added.
Yano said Mizuho is preparing to
open a branch office in Tianjin. The bank has branches in Beijing, Dalian,
Shanghai, Shenzhen and Wuxi, and aims to double its Chinese outlets within five
years, he said.
Japanese banks including Mizuho are looking to other
markets in Asia as earnings slow at home. Lending by the nation's biggest banks
fell 0.4 per cent in October, the third straight month of slowdown after a spate
of borrowing before July when the Bank of Japan raised interest rates for the
first time in six years.
Mizuho's net income slid 2.1 per cent in the
three months ended on September 30 as higher rates stalled loan
demand.
China, which will eliminate restrictions on overseas banks to
meet World Trade Organization commitments, decided banks not locally
incorporated must set aside twice as much capital per branch, won't be allowed
to issue credit and can accept only large deposits. The restrictions will limit
the ability of banks without a local charter to amass funds and grow through
lending.
The rules, issued on November 15, prompted London-based Standard
Chartered Plc to apply for local incorporation the following day. HSBC Holdings
Plc, which has operated in the nation for a century and a half, has said it will
also do so.
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