Mizuho Securities Head Sakai to Replace Sato as Group CEO

(Bloomberg) -- Mizuho Financial Group Inc. named its securities head to replace Yasuhiro Sato as chief executive officer, the first change at the helm of Japan’s third-biggest banking group since 2011.

Tatsufumi Sakai, 58, will take the post on April 1, Mizuho said in a statement on Monday. He led the bank’s international unit before taking the helm at the brokerage arm in 2016. Koichi Iida, 55, will take over as head of Mizuho Securities, and Sato, 65, will become group chairman.

Sakai inherits a bank whose financial performance has trailed Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. this fiscal year as the central bank’s negative interest rate policy squeezes domestic loan margins and saps profitability. Like its bigger rivals, Mizuho is cutting costs -- it plans to eliminate 19,000 positions over the next decade -- and diversifying operations away from traditional lending.

“Our industry is changing, so we must change too,” Sakai said at a news briefing with Sato in Tokyo. “We’re acutely aware of the issue of our low profitability,” he said, while adding that “structural change is not just about cutting costs. We must grow the top line too.”

M&A Head

The move indicates Mizuho’s growing reliance on its securities business to bolster profitability as Japan’s shrinking population curtails loan demand.

“This illustrates the old-fashioned business of lending money from deposits is becoming less viable and it’s becoming difficult to raise profit without shifting to securities business,” Mitsushige Akino, an executive officer with Ichiyoshi Asset Management Co. He said it’s rare in Japan for the head of a financial group’s brokerage unit to become CEO.

Appointing the brokerage head as group chief “sends a strong message both internally and externally,” Sato said. The relationship between the banking and securities operations will be “very important going forward.”

Sakai is the first CEO of Mizuho to be chosen since it set up a nomination committee in 2014 to improve transparency in its leadership selection process.

Pare Gains

Shares of Mizuho pared gains after the announcement, closing 0.8 percent higher after gaining as much as 1.6 percent. The stock has risen 2.3 percent in the past year, trailing MUFG’s 22 percent increase and Sumitomo Mitsui’s 16 percent advance.

Sato became CEO in June 2011. He oversaw the merger of the corporate and retail banking subsidiaries in 2013 as part of a vision to create “One Mizuho.” The following year he stepped down as president of the combined lending unit, while remaining chief of the holding company, following a scandal over loans to crime groups. 

After graduating from the University of Tokyo in 1984, Sakai joined Industrial Bank of Japan Ltd., a predecessor of Mizuho. As a head of mergers and acquisitions at Mizuho, he advised on about 100 deals from 2002 to 2007. Among the transactions the firm worked on was SoftBank Group Corp.’s $17.5 billion acquisition of Vodafone Group Plc’s Japanese mobile-phone unit in 2006.

Mizuho’s profit fell 12 percent to 316.6 billion yen ($2.9 billion) in the first six months of the year ending March. Earnings at MUFG, the nation’s biggest bank, rose 28 percent and Sumitomo Mitsui’s climbed 17 percent.

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