So they’re innocent. Really.
Yes, really. From Bloomberg:
Two girlfriends of former Mizuho International Plc investment banker Thomas Ammann were found not guilty of illegally trading on tips from him about Canon Inc.’s acquisition of OCE NV.
The Securities and Exchange Commission is further expanding a probe into collateralised debt obligations, including pressing for a $200m settlement with Citigroup, negotiating a settlement with Credit Suisse, the WSJ reports, citing people familiar with the matter. The talks with Citigroup and Credit Suisse concern Class V Funding III, a $1bn CDO. Credit Suisse, which acted as a collateral manager on the CDO, was expected to pay a smaller penalty of less than $5m, the report says. The SEC is said to be also looking at a separate CDO deal involving Mizuho, although this was reportedly months from completion and may not result in charges being laid against the banks.
The power company at the centre of Japan’s nuclear power plant crisis has turned to the country’s biggest banks for an emergency loan of up to Y2,000bn ($25bn) amid escalating clean-up and rebuilding costs, reports the FT. Engineers from Tokyo Electric Power have been struggling to contain the situation at the Fukushima nuclear plant since the devastating earthquake and tsunami struck on March 11. On Tuesday, the Japanese government estimated rebuilding costs from the natural disasters at Y25,000bn – almost 5% of GDP. Sumitomo Mitsui Bank, Tepco’s main bank, is expected to lend about Y600bn, Mizuho an estimated Y500bn and Mitsubishi UFJ about Y300bn, with trust banks and others providing the remainder. DealBook notes there has been no talk of government guarantees for such loans, and says the debt could raise further questions about Tepco’s long-term financial health.
From Reuters on Thursday:
TOKYO, March 17 (Reuters) – Mizuho Bank said its automatic teller machines failed for a second time Thursday across Japan after a shutdown earlier in the day. A spokesman for the company said its ATM network failed at 0840 GMT, with its internet banking services also down. Japan’s second largest bank said it did not know the reason for the latest trouble. Read more
In addition to being big Japanese government-bond buyers, Japan’s megabanks are also (wait for it) heavily invested in equities. Though not as much as they used to be.
There’s a slightly ironic backstory here that has to do with Japan’s very long banking crisis. During the bubble years, Japanese banks rushed to invest in the country’s booming stock market — often booking any share price gains as ‘unrealised gains’ or ‘hidden reserves’ that fed into their regulatory capital. Once the market crashed, the banks posted huge equity losses. The financials subsequently cut down on their share holdings (relatively) and Japan’s regulators reacted with some new rules. Read more
Mizuho Financial Group, Japan’s third-biggest bank, agreed to buy a 2% stake in BlackRock for $500m, including shares sold by Bank of America, reports Bloomberg. Mizuho will buy 2.45m shares of the world’s largest asset manager directly from Bank of America. It also purchased shares in a secondary offering earlier this week. After the transaction, Tokyo-based Mizuho will help distribute BlackRock’s funds to Japanese investors, said a person close to the matter. The deal comes as Japan’s biggest banks are accelerating asset purchases in Europe, North America and Asia as growth in borrowing slows at home. Mizuho’s accord follows MUFG’s negotiations unveiled last week with Royal Bank of Scotland to buy project-finance assets.
Bank of America Merrill Lynch has sold loans it made to UK real estate firm Foxtons at the peak of the London property bubble to Haymarket Financial, a corporate lender launched last year, reports the FT. The deal severs all lending links between BofA and Foxtons, as the US bank is also selling its share of Foxtons’ mezzanine loans. Foxtons, best-known for its aggressive selling tactics, was bought for £360m by private equity group BC Partners in May 2007 using about £270m of debt from BofA and Japan’s Mizuho. A debt restructuring last December reduced the company’s debt from £270m to £130m. HayFin is paying less than 90p in the pound for the senior loans.
While Europe grapples with internal politics, regulatory rows and sovereign debt problems, Japanese banks are quietly continuing their fund-raising frenzy. According to figures compiled for FT Alphaville by data provider Dealogic, Japanese banks raised a whopping Y3,530bn, or just under $38bn worth, of funds via 12 equity issues in 2009. Read more
Mitsubishi UFJ Financial Group underlined the recovery in Japan’s banking sector on Tuesday as it reported a return to profit last year amid improved market conditions, reports the FT. But Japan’s largest bank said it expected net profits of Y400bn ($4.3bn) for the current year, a conservative forecast that reflects concerns about the slow pace of economic recovery. MUFG’s outlook was more cautious than those of rivals SMFG and Mizuho, which last week reported a return to full-year net profit and forecast stronger earnings this year.
Oh dear… it’s not quite a “fat-finger” case this time but rather, what you could call a “thick” moment for a hapless trader.
J-Com, the Japanese recruitment company at the centre of a “fat finger” trade in 2005 , was this week again caught up in a market bungle after a trader mistakenly bought up a chunk of its shares in the belief it was a similarly named but unrelated company at the centre of a takeover deal. Read more
Foxtons, the UK estate agent known for its aggressive selling tactics, has been taken over by its lenders after one of private equity’s most ill-timed deals. BC Partners, the buy-out group that acquired Foxtons from founder Jon Hunt for as much as £360m in May 2007, has agreed a refinancing deal to halve the agent’s debt in return for giving its lenders a majority stake. After more than a year of talks with Bank of America and Mizuho, the deal’s backers, BC Partners has agreed to inject less than £50m of fresh equity to remain its largest minority shareholder. The banks will own the majority of Foxton’s equity.
Mizuho Financial Group, Japan’s third-biggest bank by market value, booked its fourth-straight quarterly loss on higher bad loan charges, reports Bloomberg. The Y4.5bn loss ($47m) in the three months ended June 30 compares with a Y133bn profit a year earlier, and a loss in the preceding quarter. Bad loan and credit charges were Y76bn in the first quarter from Y4.7bn yen a year earlier as corporate bankruptcies continued to rise in Japan.
Rights issues, all the rage in many key markets, have never been popular in Japan.
In fact, just like in the US, they are non-existent. That is partly due to a broad preference among Japanese companies for tapping the broader market with new share sales or using private placements – not least because of a Tokyo Stock Exchange rule that only allows them to conduct rights issues through doubling outstanding shares, not a smaller dilution, such as just a fifth of outstanding shares. Read more
Shares in Daiwa Securities and Mizuho Financial Group fell on Monday amid investor concerns over the dilutive effect of new share issues planned by the two financial groups. Daiwa, which unveiled a Y240bn ($2.5bn) fund-raising on Friday, suffered a 12% drop in its share price to Y587 while Mizuho, which is expected to raise Y600bn by issuing new common shares, saw its shares fall 3.4% to Y229. The fundraisings follow large share issues by Japan’s top financial institutions.
Citigroup has moved a step closer to selling its Japanese asset management arm, with at least four contenders lined up for a second round of bidding. The US bank is thought to want more than Y100bn ($1bn) for Nikko Asset Management. Nomura, Japan’s largest asset manager, is among final bidders. Mizuho, Japan’s second-largest bank; SMFG, which is buying Nikko Cordial, Japan’s third-largest broker, from Citi for Y545bn; and T&D Holdings, which owns insurance companies and an asset manager, are also believed to be bidders.
Japanese banks have not – yet – suffered the fates of some of their western counterparts. On the contrary, the big ones have been busily making deals to buy chunks of western banks and securities companies (a la Nomura, MUFG, SMFG etc).
But like everything in Japan, there’s a lot going on below the surface. Friday’s news that Mizuho Financial Group, Japan’s second-largest bank, plans to raise about Y800bn ($8.35bn) by selling shares and securities to shore up its capital merely confirms an accelerating trend: Japan’s banks are in urgent need of cash. And the reason they have to rush out capital-raising plans is that they are repeatedly getting their earnings estimates wrong. We wonder why. Read more
Mizuho Financial Group, Japan’s second largest bank, on Thursday warned it would report a full-year loss of Y580bn ($5.9bn) rather than a profit of Y100bn in the year to March 2009. The news came after third-ranked SMFG revised its full-year figures from a Y180bn profit to a Y390bn loss. Analysts expect MUFG, Japan’s largest bank, to also cut its forecast. Nomura Securities, Japan’s largest broker, is also expected to report a substantial loss when it reports Friday.
First it was Deutsche Bank, then South Korea’s Woori Bank, Spain’s Banco Sabadell and now, Mizuho has become the first Japanese bank in recent years to decide not to repay a bond as expected.
Mizuho, Japan’s second-largest bank by revenue, declined to redeem $1.5bn of perpetual subordinated bonds in order to preserve capital eroded by losses on stock investments, Bloomberg reported on Monday. The 8.375 per cent bonds sold in 2004 become callable on April 27, according to Bloomberg data. The securities are held by retail investors in Asia, Mizuho said on its website, adding that such bonds aren’t typically redeemed at the first call date. Read more
Citigroup’s latest moves, to sell off its Nikko Cordial brokerage business in Japan, has triggered speculation about the likely buyer of Japan’s third-biggest broker – not least because Japan’s big banks, either absorbed with their own problems or existing deals, are hardly likely to be falling over themselves to spend the $5bn to $9bn that the FT reckons the business would fetch.
Not only that, some analysts question whether the sale of Japan’s third-biggest broker – at a time when competition is heating up in what is still one of the world’s biggest capital markets – might be a sale too far for beleagured Citi, which could end up losing out if it has to sell the business at a knockdown price rather than holding onto it. Read more
Amid almost relentlessly gloomy data emerging from Japan, the country’s stock markets have been doing very nicely thank you. Only on Friday did Japanese stocks snap (by incremental amounts) their solid nine-day winning streak, with the Topix falling back just 0.3 per cent to 824.53 and the Nikkei 225 Stock Average slipping 0.1 per cent, to close at 8,626.97. For the week, however, the Nikkei gained 8.6 per cent, while the Topix ended up 7.8 per cent, the most since November 1997.
As KBC strategist Jonathan Allum noted in his daily newsletter, the Topix by Thursday had enjoyed its longest run of uninterrupted success since August 2004. But traders in Tokyo “seem happy to dismiss this as a government-inspired ramp for the end of the fiscal year,” he added, and “since this theory cannot be either verified or falsified it will be dismissed as meaningless by the methodologically scrupulous”. Read more
Mizuho Financial Group, Japan’s second-largest bank, plans to sell as much as Y900bn ($9.2bn) of equity holdings, as the sinking value of its investments threatens to cause the bank’s first annual loss in six years, reports Bloomberg. Takashi Tsukamoto, who becomes Mizuho’s chief executive on April 1, said the bank still holds Y2.9 trillion in stocks and wants to quickly reduce it to under Y2.5 trillion and then to Y2 trillion.
While “bonus rage” has become a household phenomenon in America, in Japan, the unfolding saga has been met with at best, perplexed bewilderment and at most, quiet shock at the disclosures of bonus and salary levels.
Even at the height of Japan’s bubble-era excess in the late 1980s, while little was made of the astronomical prices investors paid for US real estate, international art works and gold leaf cocktails, Japanese financial executives rarely made anything like the amounts revealed in the AIG bonus scandal – or for that matter, what Wall Street executives regularly took home. Read more
Mizuho Financial Group, Japan’s second-largest bank, said it may consider buying Citigroup’s local brokerage and asset-management units, reports Bloomberg. Yasuhiro Sato, who will become CEO of Mizuho’s corporate banking unit on April 1, said on Tuesday the deal was “worth considering”. Citi’s Nikko Cordial brokerage has a strong distribution network, and Nikko Asset Management is likely to attract many bidders, he said. Acquiring the units would help Mizuho tap more of the almost Y1,500 trillion ($17,000bn) in Japanese household assets. Citi, which received $45bn of US rescue funds, said Jan 16 that the Japanese units are among assets it may sell.
Mizuho Financial Group appointed Takashi Tsukamoto as chief executive officer, ushering in new leadership after subprime-related losses crippled earnings and a deepening recession pushed the Japanese bank to forecast its smallest annual profit in six years, reports Bloomberg. Tsukamoto, now deputy president, will from April 1 replace Terunobu Maeda, who has led Mizuho since 2002, the bank said Friday. Tsukamoto, 58, takes the helm as Mizuho attempts to raise Y355bn ($3.9bn) after rising bad loans and losses on stockholdings forced it to cut its profit estimate by 55% to Y250bn in October.
Mizuho Financial Group, Japan’s second-largest bank by revenue, plans to sell about Y300bn ($3.2bn) of preferred securities to replenish capital depleted by rising bad loans and losses on stock investments, reports Bloomberg. The securities, which can’t be converted into common shares, may be sold to institutional investors in Japan as early as by year-end. Mizuho confirmed the plan to sell preferred securities but said the amount had not been decided. The bank, which invested $1.2bn in Merrill Lynch this year, is tapping investors after rising bad debts and losses on equity holdings caused Japan’s five largest banks to slash profit forecasts. Other lenders may follow suit after the Nikkei 225 average tumbled 24% in October, the worst month on record, eroding their capital. Mizuho issued Y303bn in preferred debt securities in July. Bigger domestic rival MUFG said Oct 27 it plans to sell as much as Y990bn of stock after investing $9bn in Morgan Stanley.
Persistent rumours — and some more hard evidence – of deepening difficulties at Goldman Sachs are fuelling debate over whether the investment bank will attempt another fund raising ahead of its fourth quarter results next month. The shares hit a five-year low, down 8.5 per cent to $71.21, on Monday after analysts at Barclays became the latest to forecast a Q4 loss for Goldman, citing in part its exposure to private equity. They were already diluted just six weeks ago by an offering that coincided with a sale of a convertible preferred stake to Warren Buffett, as John Carney notes on Clusterstock.
Now, we hear in Tokyo that Goldman executives recently approached Nippon Life, one of Japan’s biggest institutional investors, and separately, Mizuho Bank, about whether they would invest in the bank. Mizuho apparently went as far as taking a (half-hearted) look at Goldman’s books but quickly lost interest. Nippon Life didn’t call back, we gather. Read more
Japanese bank Mizuho has agreed to invest in US-based Evercore Partners as it continues to expand its overseas operations amid a declining domestic market, while the latter hopes to build up its asset management business. The two companies have had ties since 2006 but this is the first alliance involving a direct investment. Mizuho will buy $120m of debt from the boutique investment bank and commit to invest up to $150m in Evercore’s funds.
Two of Japan’s largest banks on Thursday unveiled first-quarter figures that reflected contrasting results amid turbulent market conditions. Mizuho, the Japanese bank that has so far suffered the largest subprime-related losses, boosted net profits by nearly 17% to Y133bn ($1.23bn) in the three months to June, helped by lower credit-related costs and a tax refund. By contrast, bad loan-related costs led Sumitomo Mitsui Financial Group to report a 51% drop in net profits to Y58bn. Mizuho, Japan’s second largest bank, has so far reported Y672bn in losses related to US subprime mortgages and credit market turmoil. But the bank took the bulk of subprime-related provisions last year, recording a loss of Y645bn. Mizuho’s better-than-expected results did not hide the difficulty it is facing along with its peers in generating profits from its core domestic banking operations.
TCI, the UK hedge fund whose bid to increase its stake in Japanese electricity supplier J-Power was blocked by Japan’s government, bought shares in Mizuho Financial Group and Kajima Corp. to get major shareholders to prod the utility to boost returns, reports Bloomberg. The activist fund bought stakes of less than 5% in Mizuho, Japan’s second-biggest bank, and Kajima, the nation’s biggest general contractor, in the past couple of months, John Ho, head of TCI’s Asia division said Monday. TCI, which has $10bn of assets, invested in the companies because they are common shareholders of Electric Power Development Co, as J-Power is known, and will seek to hold them accountable on how they vote, Ho said. TCI is J-Power’s biggest shareholder, with a 9.9% stake.