A Japanese financial institution is said to be leading the pack of potential buyers for Credit Suisse's US securitization business.
Japan's Mizuho Financial Group has emerged as an interested party for at least part of Credit Suisse's securitized product group, according to «Bloomberg» (behind paywall) story Friday, citing people familiar with the matter.
According to the report, Apollo Global Management, Centerbridge Partners, Pimco, and Sixth Street are among other potential buyers. The major bank is nearing an agreement in the negotiations for a sale of the division, according to the sources.
Highly Profitable Division
Credit Suisse's Securitized Products Group (SPG), headed by New York-based Jay Kim since 2016, buys and sells securities backed by pools of mortgages and other assets such as auto loans or credit card debt. The unit also provides financing for customers who want to buy these products. On their behalf, loans are converted into new securities, «securitized», with varying degrees of risk and return, and sold to investors for a fee.
According to Credit Suisse, the SPG division is highly profitable and includes $20 billion in risk-weighted assets and about $75 billion in leverage exposure.
Strategy Review Ongoing
A Credit Suisse spokesman told Bloomberg the strategy review is ongoing and will report next week. «It would be premature to comment on potential outcomes before that time,» he said. Mizuho also declined to comment.
Tokyo-based Mizuho, which is led by CEO Masahiro Kihara, had recently described its securitized products business as a «core pillar» of its market operations in the Americas. The US is «a super-important market» and the second-largest revenue and profit generator after Japan, Kihara said in an April interview. The bank could expand operations in the Americas, he said.
A possible purchase would be one of Mizuho's biggest deals since it bought a portfolio of North American loans from the Royal Bank of Scotland for about $3 billion in 2015. Kihara, who was promoted to the top job at the institution in February, has already recently acquired a minority stake in a rival brokerage for 80 billion yen ($543 million).
