Japanese heavyweight banks Mizuho and Sumitomo Mitsui Trust are said to be considering merging their asset management arms. Will this be the first of further business integrations in Japan?
At a time when the Bank of Japan’s (BOJ) negative interest rate policy has put pressure on profits, Mizuho Financial Group and Sumitomo Mitsui Trust Holdings are discussing integrating their asset management businesses, a report in the «The Japan Times» claims
Mizuho and Sumitomo Mitsui Trust have increased collaboration over the years by, for example, setting up a securities-related joint venture in 2008.
With the BOJ's aggressive monetary easing expected to continue for the time being, moves to realign business could also be on the table among other major banking groups.
Cost Cutting
At the heart of the talks between the two groups are Trust & Custody Services Bank, 54 percent owned by Mizuho, and Japan Trustee Services Bank, 67 percent owned by Sumitomo Mitsui Trust.
The potential get together is naturally aimed at boosting the scale of the business to curb costs and implement streamlining.
Although details have yet to be worked out, Mizuho and Sumitomo Mitsui Trust aim to eventually merge the two banks, according to the report.
Considering Various Options
One idea being floated is initially bringing the two banks under a holding company, Mizuho and Sumitomo Mitsui Trust are expected to announce details as early as at the end of March.
The combined outstanding balance of assets under their management at the end of Sept 30 last year were around $3.37 trillion, more than double the size of assets under management by rival Mitsubishi UFJ Financial Group Inc.
Mizuho and Sumitomo Mitsui Trust released statements saying they are considering various options to further enhance their business efficiency but nothing had been decided.
