Mizuho Financial Group: long-term performance & turning pointsSales (revenue) and profit-margin ratio
Sales (¥ bn)Net margin (%)
1999Three banks gather under a holding company, and the bank is split by customer type
1998The Long-Term Credit Bank of Japan and the Nippon Credit Bank fail
1999IBJ, Dai-Ichi Kangyo and Fuji announce full integration on 20 August
2000Mizuho Holdings established by share transfer on 29 September
2000Combined assets of about ¥140tn, the largest in the world at the time
2000The Japan Fair Trade Commission clears the combination
2000Plan set out: 150 branches consolidated, 6,000 staff cut over five years
2001Mycal, a main Dai-Ichi Kangyo borrower, fails in September
2001All nine Mizuho Holdings directors to resign, announced in December
2002Split-merger into Mizuho Bank and Mizuho Corporate Bank on 1 April
2002Nationwide ATM stoppages and double debits on the first day
2002The Financial Services Agency issues a business improvement order on 19 June
Three banks that had spent the twentieth century in different businesses — industrial finance at the Industrial Bank of Japan, public money and mass deposits at the Fuji Bank, and the largest postwar branch network at the Dai-Ichi Kangyo Bank — put themselves under a single holding company in September 2000, creating a bank with combined assets of roughly $1299.4B (¥140tn). Scale came first, and the decisions about whose systems and whose organisation would prevail were left for later; on the first day of the new two-bank structure in April 2002 that postponement came due.
The dead end of the long-term credit bank, and the decision to merge three banks
By the end of the 1990s Japan's large banks had had their earnings base worn away by the disposal of bad loans left from the collapse of the bubble and by ultra-low interest rates. In 1998 the Long-Term Credit Bank of Japan and the Nippon Credit Bank failed one after the other, and the long-term credit bank as a business model reached a dead end. The Industrial Bank of Japan, whose funding through bank debentures was thinning, looked for a combination with a city bank, and on 20 August 1999 it announced a full integration together with the Dai-Ichi Kangyo Bank and the Fuji Bank. On 29 September 2000 the three banks established a joint holding company, Mizuho Holdings, by share transfer, each becoming its wholly owned subsidiary. Their combined assets came to roughly $1299.4B (¥140tn), the largest scale in the world at that time. In its review the Japan Fair Trade Commission found the three banks' combined share ranked first in every category — about 20 per cent of deposits, a little over 25 per cent of lending and just under 20 per cent of corporate bond underwriting — yet judged that the combination would not substantially restrain competition, given the competitive pressure from adjacent markets and the entry of postal savings and internet banks.
The three banks set out a plan to turn scale into earning power: over the five years from the autumn of 2000 they would consolidate 150 domestic branches and cut 6,000 staff and $928.2M (¥100bn) of expenses. By clearing away overlapping systems investment they would secure $1.4B (¥150bn) a year of investment capacity — three times the city-bank average — and in a normal year post $9.3B (¥1tn) in net business profits. Even so, their combined net business profits of $9.1B (¥986bn) fell far short of the $14.3B (¥1.54tn) of Bank of America, whose total assets were only about half theirs. Yamamoto Yoshiro (山本惠朗), president of the Fuji Bank, said of the new bank himself that it was big in size, but good in neither efficiency nor profitability. The holding company began under a troika: Yamamoto and Nishimura Masao (西村正雄), president of the Industrial Bank of Japan, as chairmen, with Sugita Chikara (杉田力之), president of the Dai-Ichi Kangyo Bank, as president.
A falling share price, and the resignation of all nine directors
The elation of the launch did not last long. When Mycal, a main borrower of the Dai-Ichi Kangyo Bank, failed in September 2001, the share price of Mizuho Holdings kept falling. The departure of chairmen Nishimura and Yamamoto and of president Sugita had been expected from a certain point, but the answer given in December 2001 was a radical one: all nine directors would resign, including the three deputy presidents seen as the likeliest successors — Ogura Toshiyuki (小倉利之), Ikeda Terusaburo (池田輝三郎) and Nishinohara Toshikuni (西之原敏州). Within the group the view was unanimous that this had been a final decision taken by the top three alone. Among the middle ranks, hopes of a clean sweep ran high.
Those who took over were Maeda Terunobu (前田晃伸) from the Fuji Bank, Kudo Tadashi (工藤正) from the Dai-Ichi Kangyo Bank and Saito Hiroshi (齋藤宏) from the Industrial Bank of Japan. The three had come up through planning, domestic retail and domestic large-corporate business respectively, and after the reorganisation of April 2002 they became president of Mizuho Holdings, president of Mizuho Bank and president of Mizuho Corporate Bank. Because none of them had been a director of Mizuho Holdings — the front line of the three banks' power struggle — the line-up inherited no grudges. Even so, Kudo and Saito also held seats with representative authority on the Mizuho Holdings board, so the troika itself was unchanged.
The 2002 reorganisation split by customer type, and the failure on day one
On 1 April 2002, a year and a half after the holding company was established, Mizuho Holdings recast its three subsidiary banks into two new banks by split-merger. The structure set Mizuho Bank, handling individuals and mid-sized and small companies, alongside Mizuho Corporate Bank, handling large-corporate business. Mizuho Bank took the old Dai-Ichi Kangyo Bank as the surviving company and succeeded to the retail division of the Industrial Bank of Japan and the retail business of the Fuji Bank; Mizuho Corporate Bank took the old Fuji Bank as the surviving company, absorbed the old Industrial Bank of Japan, and then succeeded to the corporate business of the Dai-Ichi Kangyo Bank.
Doubts had been cast on this design even before it began. From the large companies that were meant to become Mizuho Corporate Bank's customers came a stream of voices saying they wanted Mizuho Bank as their main bank, because they needed settlement and payroll transfers handled at locations across the country. With its limited number of locations, Mizuho Corporate Bank could not easily meet that demand. The heaviest question of all — which core banking system to make the backbone — was likewise left unsettled and carried over in this reorganisation.
On the day the two-bank structure began operating, the switchover of core banking systems brought ATM stoppages, double debits and delayed account transfers on a nationwide scale. The relay-computer arrangement, which left the three banks' existing systems in place and interconnected them, exceeded its tolerable load and could not complete the processing. The three banks had at one point decided to adopt the Dai-Ichi Kangyo Bank's system in retail and the Industrial Bank of Japan's system in wholesale. But under a merger of equals the contest for the lead ran on, unification fell behind, and the three banks gave priority to the launch date, going live without securing enough time for full operational testing. Delayed account transfers reached about 2.5 million cases as of 5 April and double debits about 30,000; two weeks after the outbreak, 400,000 account transfers were still unprocessed. On 19 June that year the Financial Services Agency issued a business improvement order under Article 26 of the Banking Act, requiring remedial measures, clarification of responsibility, and reports on implementation every three months.
2009Consolidated net loss of ¥588.8bn for the year to March
2009Shinko Securities absorbs Mizuho Securities and takes its name
2009Tsukamoto Takashi becomes president in June
2010Orient Corporation becomes an equity-method affiliate in September
Mizuho Financial Group itself was incorporated in January 2003 and listed that March, sitting above Mizuho Holdings in a two-tier structure that took until 2005 to unwind. Between a capital raise of about $8.6B (¥1tn) at the depths of the bad-loan problem and a net loss of $6.3B (¥589bn) after Lehman, ordinary income moved from $30.6B (¥3.56tn) in the year to March 2006 to $32.1B (¥2.82tn) in the year to March 2010 — while the interconnected core systems inherited from the three banks were still untouched.
The founding of Mizuho Financial Group, and a ¥1 trillion capital raise
In January 2003 Mizuho Financial Group was established with investment from Mizuho Holdings. At an extraordinary general meeting of Mizuho Holdings that month, shareholders approved Mizuho Financial Group taking Mizuho Holdings as a wholly owned subsidiary by share exchange, and making Mizuho Trust & Banking a direct subsidiary of Mizuho Financial Group through a split of the subsidiary-management business. In March that year, alongside making the two companies direct subsidiaries, a business restructuring placed strategic subsidiaries — credit card companies, asset management companies, systems-related companies and others — directly beneath the group, and the ordinary shares were listed on the Tokyo Stock Exchange and the Osaka Securities Exchange. Maeda Terunobu, from the Fuji Bank, became its first president.
In March 2003, the same month it was founded, Mizuho Financial Group went ahead with a capital raise of about $8.6B (¥1tn). In May that year, in order to separate from the banks themselves the loans to borrowers in need of rehabilitation or restructuring, four specialist rehabilitation subsidiaries — Mizuho Project, Mizuho Corporate, Mizuho Global and Mizuho Asset — were established as direct subsidiaries of Mizuho Bank, Mizuho Corporate Bank and Mizuho Trust & Banking respectively. The following June, Mizuho Advisory was set up to supply corporate-rehabilitation schemes to each of them.
Maeda chose to show the effects of the integration quickly through branch and staff reductions, compressing a branch consolidation that was originally to take three years into one and dealing with 104 branches in the year to March 2004. He judged that 950 borrowers with $34.5B (¥4tn) of exposure could be rehabilitated, set aside provisions against them, assigned some 700 staff and aimed to complete the work within three years. Individual accounts numbered 20 million, but he also stated his view that only the top 10 to 20 per cent contributed to earnings. As for the clear vision the front line was asking for, he brushed it aside — a vision is an empty thing — and said that however many abstract messages the holding company puts out, I do not think they get through, arguing that the head of each company should speak for himself.
Unwinding the two-tier structure, and repaying the public money
It was in October 2005 that Mizuho Financial Group acquired all the shares in Mizuho Bank and Mizuho Corporate Bank held by Mizuho Holdings, and Mizuho Holdings changed its trade name to Mizuho Financial Strategy, completing the tidying-up of the two-tier structure. In the same month the four specialist rehabilitation subsidiaries, having served their original purpose, each merged into their parent bank, and Mizuho Private Wealth Management was newly established to take over, by corporate split, the business serving wealthy individuals. Mizuho Advisory was dissolved in March 2006.
As of 2005 just under $13.6B (¥1.5tn) of public money remained outstanding, and Maeda set full repayment during the year to March 2007 as a new goal in the three-year plan. The capital adequacy ratio stood at about 12 per cent, and his outlook was that repaying out of capital would not take it below 10 per cent. He set the Nikkei average at ¥10,000 as a premise, avoiding optimistic assumptions. Around the same time he indicated a policy of attempting a listing on the New York Stock Exchange, taking seriously what it meant to satisfy listing standards in a market with strict rules; American depositary shares were listed in November 2006. The route of bringing consumer finance into the group was not taken, on the grounds that no synergy would work with existing customers.
The Lehman shock, and a ¥588.8 billion net loss
The failure of Lehman Brothers in September 2008 struck Japanese banks holding securitised products directly. At Mizuho, credit costs and losses on equity valuations both swelled in the year to March 2009, and it posted a consolidated net loss of $6.3B (¥589bn). Even among the three domestic megabank groups the thinness of its capital stood out, and amid the international tightening of capital regulation heading towards Basel III it was forced to build capital through repeated public offerings and issues of preferred shares.
The reorganisation of the securities business also advanced in this period. In May 2009 Shinko Securities, an affiliate, absorbed the subsidiary Mizuho Securities and changed its trade name to Mizuho Securities. In June that year Tsukamoto Takashi (塚本隆史) succeeded the Maeda regime as president. Nine years after the integration, the platform that left each of the three banks' core systems in place and interconnected them was still standing untouched.
2011From the second system failure to One Mizuho and MINORI
Revenue (¥ bn, bars) · net margin (%, line)
Source: securities reports
FY2011 · consolidated
Revenue$34.1B
Net income$5.2B
Net margin15.2%
→
FY2019 · consolidated
Revenue$36.0B
Net income$885M
Net margin2.5%
2011Second large-scale failure in March; 440 branches and 1,600 ATMs stop
2011Merger of Mizuho Bank and Mizuho Corporate Bank announced on 18 May
2011The Financial Services Agency issues business improvement orders on 31 May
2011Sato Yasuhiro becomes group CEO in June
2011Trust, Securities and Investors Securities made wholly owned in September
2011Target of 3,000 job cuts and ¥100bn a year of integration benefit
2013Merger approved on 21 June and completed on 1 July as one Mizuho Bank
2014Moves to a committee-based company structure in June
2015North American loan assets and staff taken over from RBS
2016Mizuho Americas LLC established in July
2017Plan to cut about 19,000 staff and about 100 locations, 13 November
2018Sakai Tatsufumi becomes president in April
2019About ¥680bn of losses; net profit down 83 per cent to ¥96.5bn
2019MINORI fully live in July after 350,000 person-months of work
A second nationwide failure in March 2011, set off by relief donations for the Great East Japan Earthquake, did what the first had not: it forced Mizuho to fold away the two-bank split, put decision-making in one place under a group CEO, and rebuild the core banking system from the ground up. MINORI went fully live in July 2019 at a cost in the mid-$4.1B (¥450bn) range, and in the same year Mizuho cleared about $6.2B (¥680bn) of losses in a single pass.
The second failure under the earthquake, and the start of the Sato regime
In March 2011 transfers flooded into an account collecting relief donations for the Great East Japan Earthquake, exceeding the number of items Mizuho Bank's overnight batch processing could handle. On 17 March the counters at about 440 branches nationwide and about 1,600 ATMs stopped, and unprocessed transactions reached 1.16 million at one point. With ATMs and counters halted, delayed transfers, duplicate transfers and late payroll payments spread across the country. It was the second large-scale failure after 2002, and on 31 May the Financial Services Agency issued business improvement orders — to Mizuho Bank under Article 26, paragraph 1 of the Banking Act, and to Mizuho Financial Group under Article 52-33, paragraph 1 of the same Act.
On 18 May Mizuho set out a policy of merging Mizuho Bank and Mizuho Corporate Bank, and overhauled its management at the same time. In June Sato Yasuhiro (佐藤康博), president of Mizuho Corporate Bank, became group CEO. At his inaugural press conference Sato said he had felt walls between the entities, acknowledging the harm done by the balanced appointments across the three legacy banks. In September he indicated that the legal integration would fall within the first half of the year to March 2014, and that same month the listed subsidiaries Mizuho Trust & Banking, Mizuho Securities and Mizuho Investors Securities were made wholly owned through share exchanges. In November he put the integration benefit at $1.3B (¥100bn) a year and set out cuts of 3,000 staff over four years and a 20 per cent reduction in the number of directors. On the point that the outward shape would become the same as the other megabanks, Sato said he had absolutely no intention of going back ten years and chasing Bank of Tokyo-Mitsubishi UFJ or Sumitomo Mitsui Banking, indicating that the strengths built by customer segment would be kept.
Ending the two-bank split, and laying the groundwork in the Americas
On 21 June 2013 the Financial Services Agency approved the merger, and on 1 July Mizuho Corporate Bank, as the surviving company, absorbed Mizuho Bank and changed its trade name to Mizuho Bank. The form of dividing the banks between individual and corporate customers, in place since the launch, was folded away after thirteen years. The three-headed structure of leaders drawn from the three legacy banks was abolished as well, and decision-making was unified in the group CEO. In April that year Mizuho Securities was made a directly held subsidiary of the holding company, moving to a capital structure in which the bank, the trust bank, the securities company and the other main group companies stood directly beneath the holding company. In June 2014 the company moved to a committee-based structure, separating board supervision from execution.
Investment in the Americas also began in this period. In 2015 Mizuho took over North American loan assets and staff in a single package from the Royal Bank of Scotland of Britain, buying a base in large-corporate business. Layered on the American operations that ran back to the days of the Industrial Bank of Japan, these assets created a foothold from which to break into the upper ranks of bond underwriting. A structure concentrating derivatives functions in the securities subsidiary was put in place alongside, producing a form that combined banking and securities across the Americas.
The completion of MINORI, and writing off the losses in one pass
After the 2011 failure Mizuho abandoned the palliative of leaving the core systems inherited from the three banks in place and interconnecting them. Adopting SOA, which divides services into functional units, it built its own new platform, MINORI, splitting orders for deposits, foreign exchange and other functions among four companies — Fujitsu, Hitachi, IBM Japan and NTT Data. The development drew in 70 to 80 companies at the primary contracting tier and some 1,000 in all, ran to 350,000 person-months, and cost in the mid-$4.1B (¥450bn) range. In November 2016 the completion planned for that December was pushed back again, with the start of operation expected from the summer of 2018 or later. After two postponements the development finished in 2017, migration was carried out in nine stages from June 2018, and the system went fully live in July 2019.
The technical settlement fed straight through to the accounts. In the year to March 2019 Mizuho dealt in one pass with structural reform costs and the losses on restructuring its securities portfolio. The losses totalled about $6.2B (¥680bn): $4.2B (¥460bn) of impairment on the core banking system, $366.9M (¥40bn) on branch consolidation and $1.7B (¥180bn) on unrealised losses in securities. Net profit attributable to owners of the parent came to $885.2M (¥97bn), 83 per cent below the $5.2B (¥577bn) of the previous year.
Ahead of that write-off, on 13 November 2017, Mizuho had published a plan of fundamental structural reform. Group employees, numbering about 79,000 at the end of March 2017, would be cut by about 19,000 by the end of the year to March 2027, and the roughly 500 locations reduced by about 100 by the end of the year to March 2025. Rather than rely on voluntary redundancy, the design cut over ten years through restrained hiring, natural attrition through retirement, and transfers to client companies. Consolidated net business profits for the interim period of the year to March 2018 were $2.2B (¥242bn), $1.5B (¥162bn) lower than a year earlier, and the combined expense ratio of the two banks stood high at 72.6 per cent against the 50 to 60 per cent range of the other two megabanks. In April 2018 Sakai Tatsufumi (坂井辰史) became president, setting out a shift away from a structure dependent on interest income.
2020Eight failures, and a medium-term plan that names what will be cut
Revenue (¥ bn, bars) · net margin (%, line)
Source: securities reports
FY2020 · consolidated
Revenue$37.3B
Net income$4.2B
Net margin11.2%
→
FY2026 · consolidated
Revenue$57.4B
Net income$7.9B
Net margin13.7%
2021ATM failures from 28 February; 5,244 cards and passbooks swallowed
2021Eight system failures in all between February and September
2021Special investigative committee publishes its report in June
2021FSA business improvement order and MOF corrective order on 26 November
2021Sakai resigns; Fujiwara and Sato step down
2022Kihara Masahiro becomes president on 1 February
2022Capital and business alliance with Mizuho Leasing in March
2022Mizuho Securities takes 19.99 per cent of Rakuten Securities in October
2023Medium-term plan names housing loans for reduction in May
2023Greenhill acquisition agreed on 22 May and completed on 1 December
2023Rakuten Securities stake raised to 49.00 per cent in December
2024Business improvement order effectively lifted on 19 January
2024About ¥165bn invested for 14.99 per cent of Rakuten Card in November
2025Record ordinary income of ¥9,030.3bn and net profit of ¥885.4bn
Eighteen months after MINORI went fully live, Mizuho Bank suffered eight system failures between February and September 2021, drawing a fourth business improvement order and the resignation of its president. Under Kihara Masahiro the group stopped assembling missing capability itself and bought it instead — Greenhill in the United States, stakes in Rakuten Securities and Rakuten Card at home — while ordinary income rose from $37.3B (¥3.99tn) in the year to March 2020 to $57.4B (¥9.09tn) in the year to March 2026.
Failures in quick succession in the second year of operation, and the regulatory orders
On 28 February 2021, a year and a half after MINORI went fully live, Mizuho Bank's ATMs stopped one after another because time-deposit data had exceeded capacity. Cases in which the machines swallowed passbooks and cash cards without returning them came to 5,244 in all, and only about 80 per cent had been returned by 2 March. The failures numbered eight in total between February and September, and on 20 August counter transactions stopped for a period at every branch. Suspensions of internet banking transactions and of foreign-exchange remittance processing followed as well.
On 26 November 2021 the Financial Services Agency issued a business improvement order under the Banking Act, and the Ministry of Finance a corrective order under the Foreign Exchange and Foreign Trade Act, at the same time. It was the fourth business improvement order over Mizuho's system failures, after 2002 and 2011. The Financial Services Agency pointed out that management had redeployed staff while mistakenly believing MINORI to be operating stably, and that the board had not put in place a system-risk management framework in which effective checks worked. The special investigative committee on the system failures, which published its report in June that year, likewise found no common cause in the design of MINORI itself, locating the causes instead in human factors — organisational capability in a crisis, control over the IT systems, and a weak customer perspective. Mizuho took the failures on as a problem of management and governance, and moved to some 200 recurrence-prevention measures and to governance reform.
President Sakai Tatsufumi accepted the Financial Services Agency's findings as essentially all management problems, and said he would draw a line by resigning as the person bearing the greatest responsibility. Fujiwara Koji (藤原弘治), president of Mizuho Bank, and Sato Yasuhiro, the chairman, stepped down as well. Even so, further failures occurred on 30 December 2021 and 11 January 2022, so the handover took place in anything but calm conditions. The successor was announced on 17 January 2022, the day Mizuho submitted to the authorities a business improvement plan containing some 200 recurrence-prevention measures, and Kihara Masahiro's (木原正裕) start was brought forward from the originally planned April to 1 February. The business improvement order was effectively lifted after about three years on 19 January 2024, when the Financial Services Agency notified the company that periodic reporting would no longer be required.
The Kihara regime's fresh start, and the gaze on the three legacy banks
The new president was Kihara Masahiro, until then an executive officer. Born in 1965, he graduated from the faculty of law at Hitotsubashi University in 1989 and joined the Industrial Bank of Japan, passed through Mizuho Bank's risk management division and Mizuho Securities' planning division, and had served as head of the global products unit at Mizuho Financial Group, responsible for M&A among other things. He was the first megabank president to have joined in the Heisei era. Kainaka Tatsuo (甲斐中辰夫), chairman of the nomination committee, said at the press conference that he expected a man fit to lead leaders, stressing that what had been valued was the ability to bring the company's people together rather than individual experience. On preventing a recurrence of the system failures, an accompanying appointment was announced: Shimono Masatsugu (下野雅承), former vice-chairman of IBM Japan, would become an executive officer of Mizuho Financial Group and a director of Mizuho Bank.
The appointments also drew questions from inside and outside the company. With Kihara's accession, Mizuho's president came from the Industrial Bank of Japan for the third time running, after Sato and Sakai. The view that IBJ alumni had long slighted retail — the business of serving individuals and small and mid-sized companies — was of long standing, and combined with the fact that the structural reform had cut staff in the retail and systems divisions, alumni of the old Fuji Bank and the old Dai-Ichi Kangyo Bank voiced unease. The chairman announced at the same time was Imai Seiji (今井誠司), from the Dai-Ichi Kangyo Bank, and the president of Mizuho Bank was Kato Katsuhiko (加藤勝彦), from the Fuji Bank, so the three central posts were shared out among the three legacy banks. Kainaka denied the reading: more than twenty years have passed since the integration, and there is no legacy-bank consciousness inside the company. Asked about his lack of retail experience, Kihara answered that management is not something one does alone, and that he would exchange views with people who knew retail well and look at the front line with his own eyes.
The Kihara regime set three tasks at the outset. On preventing a recurrence of the system failures, it would carry the business improvement plan through by the end of March 2023 and devote itself thereafter to embedding it. The second was reform of the corporate culture: when he talked with the front line in 2022 much of what he heard was negative, but when he toured 15 or 16 branches in Kyushu, Sanyo, Kansai and elsewhere in April 2023, positive views stood out. Kihara described how far it had come as reform is still only at the second or third station of the climb, and said he would create an environment in which employees could speak and act on their own initiative. The third was drawing up a corporate philosophy and a medium-term management plan.
A medium-term plan that writes down what to cut, and capability bought from outside
The medium-term management plan published in May 2023 wrote in that housing loans would be reduced. A statement naming the symbol of the retail business as non-priority startled people at the other megabanks. The groundwork had been laid the year before: the earnings-briefing materials of November 2022 carried an inserted chart headed a sharper review of allocation. It took risk-adjusted return on the vertical axis and growth on the horizontal, placing individuals and small and mid-sized companies at the lower left, meaning the mature markets, and corporate, overseas and asset management at the upper right, the growth markets. The five-year plan drawn up under the previous president, Sakai, and due to run to the year ending March 2024, was broken off, and Kihara judged that growing the housing-loan balance would be difficult, saying that competition on rates is enormously overheated, and spreads too have narrowed considerably. Of the branch network — the only one among the three megabanks to cover every prefecture — he said that if we cannot explain why it exists, we should withdraw. He put mid-sized companies at the centre of what would be grown, and set up a business growth support office in April 2023.
Overseas, Mizuho chose to buy the functions it needed, announcing on 22 May 2023 that it would acquire the American M&A advisory firm Greenhill through Mizuho Americas LLC. The price was US$15 a share, an enterprise value of about US$550 million including the debt assumed, or roughly $540.9M (¥76bn). The offer was 121 per cent above the previous Friday's close. Greenhill was an established independent house, founded in 1996 and listed on the New York Stock Exchange in 2004, with about 370 staff across 15 offices worldwide. Kihara said of the investment banking business in the Americas that the last missing piece is M&A, indicating an intention to add M&A to a strength that consistently ranked within the top ten in bond underwriting. Buying a bank itself was ruled out because the burden on capital is too heavy, and large goodwill comes with it. The acquisition completed on 1 December 2023, making Greenhill a wholly owned subsidiary.
On the retail side it chose to team up with an outside customer base. In October 2022 Mizuho Securities acquired 19.99 per cent of the shares in Rakuten Securities from Rakuten Securities Holdings for about $609M (¥80bn), making it an equity-method affiliate that November. In December 2023 it acquired a further 29.01 per cent, raising the stake to 49.00 per cent. Taking a majority would have made the company a subsidiary and brought heavier regulation as part of a banking group, so the ratio was stopped at 49 per cent. In November 2024 it invested about $1.1B (¥165bn) for 14.99 per cent of Rakuten Card, taking transfer of the shares on 1 December. Issuance of a co-branded card began on 3 December, with UC Card, a wholly owned subsidiary of Mizuho Bank, and Orient Corporation, 49 per cent owned, also brought into the framework. On the size of the stake Kihara said at a press conference that I am cautious, so I thought we would start from below the equity-method threshold. The net business profits of more than $6.3B (¥1tn) that Mizuho set out for the year to March 2026 are a level it has never once reached since Mizuho Financial Group was founded in 2003.
The turning points, read in full: what was at stake, what was chosen and what the revenue did around it. The Japanese edition is the edition of record and carries the sourced dossier behind each decision — background, options weighed, outcome — linked under every decision.
Revenue (¥ bn) · net margin % · around FY2011
Key decision · 2011
One MIZUHO: merging Mizuho Bank and Mizuho Corporate Bank to end the two-bank split (2011)
A technical failure taken on as a rebuilding of governance
The core of this decision lies in taking a technical failure — a breakdown of banking systems — and carrying it over into a rebuilding of governance. Behind the fact that transfers of relief donations converging on a single account could halt settlement across the country lay the structure in place since the launch: the bank split in two to keep the three legacy banks in balance, with core systems held in duplicate as well. Mizuho did not shut the cause away in operating mistakes on the front line; it took it on as an organisational problem, folding two banks into one and unifying decision-making. Only after repeating the same failure twice did it finally reach the structure itself.
Even so, making the organisation one is not the same as dissolving the colours of the three banks. The banks were unified by the merger, but legacy-bank consciousness and the clearing-up after divided systems lingered long: the integration of the core systems took shape only in 2019, and the questions about corporate culture trailed on to the new failures of 2021. Still, the 2013 merger, in which Mizuho itself folded away the founding design of dividing the bank between individuals and companies, can be read as the turning point at which it began to face the liquidation of the three-way split in earnest. One MIZUHO entered the stage of being tested by practice rather than by slogans.
Fundamental structural reform: cutting about 19,000 staff and about 100 locations (2017)
What cutting fixed costs alone does not fill
The core of this decision lay in how far a Japanese bank, its margins thinned by low interest rates, could fold away an earnings model premised on the fixed costs of branches and people. The scale — a quarter of all employees — caught the public eye, but the design of proceeding over ten years by natural attrition rather than voluntary redundancy carried, at the same time, both consideration for employment and slowness of execution. That Mizuho itself, while placing cost reduction at the top of its agenda, stumbled over its systems integration and could not get branch reductions properly under way for several years can be read as a reflection of how the compression of fixed costs does not advance as a single piece.
Squeezing staff numbers and lowering the expense ratio is in itself no more than a treatment that lightens the denominator of the earnings structure. How to recover the numerator — the power to earn — was carried over to the later choices of concentration: cutting housing loans and shifting towards corporate and overseas business. The reduction of about 19,000 staff was a late answer to the condition Japanese banks had long carried, of having too many people and too many branches, and it can also be called the first move that prompted the reshaping of the business portfolio that followed. How far Mizuho can narrow the gap in earning power that cutting fixed costs alone does not fill remains as a task ahead.
The full rebuild of the core banking system into MINORI: mid-¥400 billions and 350,000 person-months (2012)
Completion promised nothing about stability
The heart of this decision lies in the resolve to abandon the line of patching along and to remake the core banking system itself. The two failures had shown the limits of a design that interconnected the systems while leaving the logic of the three legacy banks in place. What Sato Yasuhiro chose was not an immediate remedy but the road of transferring everything onto a platform reassembled into functional units. A scale of 350,000 person-months and the mid-¥400 billions would tie up IT engineers in Japan for a long time and bind Mizuho's financial strength for years. Even so, set against the danger of going on postponing the tasks left undone, it must have looked like a price worth paying.
The verdict is still not settled. Full operation, nineteen years in the making, settled on technical ground the integration that had been put off at the launch. Yet immediately afterwards MINORI became the stage for eight failures, demonstrating that building something does not promise that it will be stable. Where the 2011 failure pulled the trigger on the rebuild, the 2021 failures occurred on top of a brand-new platform. Vast IT investment easily makes completion itself the goal, and the difficulty of keeping the thing running remains after it goes live. Completing an integration and running it stably are separate tasks — Mizuho's MINORI will be remembered as the case that left that lesson behind, with a price tag in the mid-¥400 billions attached.
Repeated system failures and regulatory orders: management responsibility and the turn to governance reform (2021)
Could it really call a systems problem a management problem?
The core of this decision lies in taking failures that could have been disposed of as technical defects and shouldering them as problems of management and corporate culture. To declare that there was no flaw in a core banking system into which nineteen years and ¥400 billion had been poured, while admitting weakness in operation and governance and having the chief executive himself step down, was a kind of accountability different from, and harder to handle than, admitting the failure of a vast investment. Having fallen into the same rut as in 2002 and in 2011, Mizuho located the cause not in the system but in the culture, and in that lies how far this decision went.
Culture, however, does not change on command. The vertical silos bred by the coexistence of three banks, and the atmosphere in which nobody speaks up to those above, remained even after the systems had been bound together again. Some 200 measures and the lifting of the order stopped a recurrence for the time being, but whether that amounts only to a repair of the mechanism, or whether it changed the quality of decision-making itself, can only be confirmed in the next crisis. The completion of an integration is settled not by technology but by people and culture — that question, twenty years old, is one Mizuho still carries.
The stake in Rakuten Securities and the capital and business alliance: Mizuho in person, Rakuten online (2022)
Half a partnership, without control
The core of this decision lies in a megabank's securities arm, whose strength has been in face-to-face sales, entering by way of capital into the inside of the online broker it competes with head-on. For a Mizuho that had damaged retail trust in the 2021 system failures, riding on the finished customer base of Rakuten Securities for ¥80 billion was faster than fencing in a young asset-building generation from scratch. A Rakuten that wanted cash because of losses in its mobile business, and a Mizuho that wanted to make up its weakness online — this investment stands where the two needs meshed.
Mizuho nonetheless stopped at 49 per cent rather than take a majority. Making it a subsidiary would have brought heavier regulation as part of a banking group and might also have damaged the Rakuten name and the company's freedom of management. The design philosophy behind the investment can be seen in the choice of an alliance in which two companies stand side by side rather than one of control. As individual asset management moves online and household money swells under the new NISA, whether this attempt — a face-to-face bank and an online broker holding hands halfway — bears fruit will be confirmed in the numbers from here on.
The acquisition of Greenhill of the United States: bringing M&A advisory in-house (2023)
Buying the missing function, and the time with it
The value of this decision lies in Mizuho having bought the function it lacked, and the time along with it. For a bank that had broken into the American debt business through bond underwriting, M&A advisory was the piece missing to the last. People, a customer base, and a name built up over a quarter of a century would take decades to grow from scratch. Paying 121 per cent above the previous Friday's close for an established house whose share price and earnings had both thinned carries the risk of overpaying, but what Mizuho wanted was less the immediate profit than the state of being able to put the advisory function to work at once.
Even so, it will take time before one can say the acquisition pushed Mizuho's investment bank up a level. The independent listed boutique grew as a business model on the strength of its nimbleness and specialism, but found it harder to sustain momentum on its own in the face of ever-larger transactions and the weight of regulation. At the end of that decline Greenhill went under the wing of a large Japanese bank, and Mizuho let go of its self-sufficiency to take in an outside business. How Japanese financial institutions make overseas advisory functions their own — here, in an overseas acquisition undertaken as the assembling of a product range in peacetime rather than as a rescue investment in a crisis, as with Morgan Stanley, one pattern was set out.
This English edition follows the Japanese one chapter by chapter. The Japanese edition remains the edition of record: it carries the source-by-source citations, the financial tables and the shareholder and executive records. 日本語版（詳細）— Mizuho Financial Group full history in Japanese →
Mizuho Financial Group — 有価証券報告書 (annual securities reports), including the 沿革 corporate-history section and the consolidated financial statements; earnings-briefing materials of November 2022; releases of 22 May 2023 on the acquisition of Greenhill & Co., Inc. and of 1 December 2023 on its closing.
Nihon Keizai Shimbun — 日本経済新聞 (Nikkei Inc.): 18 May and 12 Nov 2011; 21 Jun and 1 Jul 2013; 12 Nov 2016; 13 Nov 2017; 21 Dec 2018; 7 Mar 2019; 3 Mar, 26 Nov 2021; 7 Oct 2022; 20 Jan 2024; 17 Aug 2018 on the 20 August 1999 announcement of the three-bank integration.
Nikkei xTECH — 日経クロステック / 日経コンピュータ (Nikkei BP), the Nakata Atsushi series on the Mizuho systems integration: 16, 17, 19 and 25 Jul 2019; 26 Jul 2019 on the split of orders among Fujitsu, IBM, Hitachi and NTT Data; 4 Sep 2019.
Nikkei Business — 日経ビジネス (Nikkei BP), no. 1130, 25 Feb 2002, on the large companies that turned away from Mizuho Corporate Bank.
Shukan Toyo Keizai — 週刊東洋経済 (Toyo Keizai Inc.): 4 and 11 Sep 1999 on the birth of the megabank; 8 Dec 2001 on the resignation of all nine directors; 21 Feb 2004 and 28 May 2005, interviews with Maeda Terunobu; 5 Nov 2011, interview with Sato Yasuhiro; 25 Nov 2017; 29 Jan 2022; 15 Jul 2023, interview with Kihara Masahiro and the report on the cut to housing loans; 30 Nov 2024. Toyo Keizai Online — 東洋経済オンライン, August 2022.
Financial Services Agency — 金融庁: administrative actions against Mizuho Financial Group of 19 Jun 2002, against Mizuho Bank and Mizuho Financial Group of 31 May 2011, and of 26 Nov 2021.
Japan Fair Trade Commission — 公正取引委員会, FY2000 case 1, on the business combination of the Dai-Ichi Kangyo Bank, the Fuji Bank and the Industrial Bank of Japan through the establishment of a holding company.
System Failure Special Investigative Committee — システム障害特別調査委員会, investigation report (published version), 15 Jun 2021.
Rakuten Group — 楽天グループ: releases of 7 Oct 2022 and 9 Nov 2023 on the strategic capital and business alliance between Rakuten Securities Holdings and Mizuho Securities.
日本会社史総覧 (A Conspectus of Japanese Corporate Histories, Toyo Keizai Inc., 1995), the entries for the Fuji Bank and the Industrial Bank of Japan.
Bloomberg, 17 Jan 2022, on the appointment of Kihara Masahiro. Kabutan News — 株探ニュース, 22 May 2023, on Greenhill shares.