Japanese banks enter dark patch
July to September profits at Japanese banks shows distinct slide, principally at Mizuho which is laying off 5% of its staff. November 16, 2011 | Peter HoflichJapan’s largest banks Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Financial Group (SMFG) and Mizuho Financial Group (Mizuho) on November 14th announced their 1H profits, showing general declines in the midst of a very tough business environment, although MUFG showed a near doubling in net income, mainly on trading income, which rose 57% on the back of one-off gains from its conversion of Morgan Stanley preferred shares to common stock. SMFG and Mizuho both saw profits drop 17% and 25.4% respectively. While the mega banks have in many ways been the victim of a sick economy, Mizuho’s problems were largely of its own making. The bank encountered a massive disruption with the March 11th tsunami disaster when a surge in remittances caused its payment system to seize up; the resulting slowdown in payment processing cost three top Mizuho officials their jobs, as well as the Japan Banking Association presidency, which rotated to the Bank of Tokyo-Mitsubishi UFJ. Mizuho is finally announcing plans to merge its two main units, retail and SME-focused Mizuho Bank with Mizuho Corporate Bank, a decade after the original merger of three banks that created the financial group. Mizuho will be laying off 5% of its work force, or 3,000 workers, a shocking development anywhere but even the more so in Japan, where layoffs are rare, especially at banks, and CEO Yasuhiro Sato has made a very tough call here. Clearly, though, these jobs represent a doubling workforce that the bank has carried for 10 years at great cost, and the decision to eliminate them one that past generations of leaders couldn’t bring themselves to make. Here, however, Mizuho is not alone in making job cuts, as Nomura is set to release 1,000 staff, its rival Daiwa 300, and a securities joint venture between MUFG and Morgan Stanley is gearing up to lay off 1,300 staff. Japanese banks face slowing demand for loans in Japan, as well as an expensive yen wreaking havoc on exporters. Now f... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: Capital & Strategic Issues, Japan, Risk and RegulationCapital & Strategic Issues,Japan,Risk and Regulation, Capital & Strategic Issues,Japan,Risk and Regulation, Keywords:Mizuho Financial Group, Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group Mizuho Financial Group, Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group
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