Business Reorganization
December 04 2002 - 6:58AM
UK Regulatory
RNS Number:6369E
Mizuho Holdings Inc
4 December 2002
OUTLINE OF "BUSINESS REORGANIZATION"
TO REFORM THE MIZUHO FINANCIAL GROUP
On November 25, 2002, the Mizuho Financial Group announced the "Mizuho Change &
Speed-Up Program" to change and accelerate the deployment of business strategies
and to accelerate cost structure reforms primarily of the core subsidiaries
including Mizuho Bank, Ltd. ("MHBK"), Mizuho Corporate Bank, Ltd. ("MHCB") and
securities and trust subsidiaries.
In accordance with the purpose of the "Program for Financial Revival" issued by
the Financial Services Agency, as well as in order to cope with the recent
severe business environment, we hereby announce that the Mizuho Financial Group
will implement the program described below titled "Business Reorganization."
Through the "Business Reorganization," we will reform the group strategy
drastically in order to enhance our competitiveness, secure high-level and
stable profitability and maximize the corporate value on a group basis.
The reorganization of the management structure (which is scheduled in March
2003) is subject to the appropriate regulatory approval and other procedures in
Japan and all related countries.
Framework of the "Business Reorganization"
1. Further reinforcement of comprehensive financial services capabilities
(1) Establish a new financial holding company named "Mizuho Financial Group,
Inc." ("MHFG") (provisional name) in order to dramatically improve the
comprehensive financial services capabilities of the group.
(2) Place the existing holding company as an intermediate holding company for
the group's banks and securities subsidiaries to strengthen the
synergistic cooperation between MHBK and MHCB, as well as between the
banking and securities subsidiaries according to customer segments.
(3) Strategically reorganize trust, asset management, and custody business
subsidiaries and place these companies directly under the new financial
holding company.
2. Acceleration of non-performing loan ("NPL") disposal and aggressive pursuit
of the corporate revival business based on the purpose of the Program for
Financial Revival
(1) Further tighten assessment of assets by elaborating the self-assessment
standard
(2) Promptly conduct disposition or revival of the NPLs that are classified
as "need special attention" or below by separating these NPLs from the
group's banking sector through the utilization of a separate entity and/
or framework for corporate revival.
3. Further reinforcement of financial strength
(1) Raise capital through the market in order to further reinforce the
financial strength.
(2) Make a conservative review of deferred tax assets based on risk
scenarios.
4. Strict implementation of the "Mizuho Change & Speed-up Program" (announced
on November 25)
1. Further reinforcement of comprehensive financial services capabilities
(1) Establish a new financial holding company named "Mizuho Financial Group,
Inc." ("MHFG") (provisional name) in order to dramatically improve
the comprehensive financial services capabilities of the group.
a) In addition to the existing group management framework centered on the
four core subsidiaries, MHFG will directly manage other primary
subsidiaries, enhance groupwide synergy and strengthen its
profitability swiftly.
b) MHFG will realize the consolidation effects promptly by strengthening
cost competitiveness through consolidation of the group's affiliates
and utilization of a common infrastructure, etc.
* Promptly consolidate system related subsidiaries and asset
management subsidiaries.
* Further expand the earning base in such growing business areas as
credit card and asset management businesses, and promote various
measures such as utilization of the group's think-tank functions
and common IT infrastructure.
(2) Place the existing holding company as an intermediate holding company for
the group's banks and securities subsidiaries to strengthen the
synergistic cooperation between MHBK and MHCB, as well as between the
banking and securities subsidiaries according to customer segments.
a) In conjunction with the establishment of MHFG, Mizuho Holdings, Inc.
("MHHD") will be reformed as an intermediate holding company to manage
the banking and securities business sector.
* The intermediate holding company will be devoted to further
strengthen synergistic cooperation between MHBK and MHCB, as well
as between the banking and securities subsidiaries.
b) According to customer segments, Mizuho Securities Co., Ltd. ("MHSC")
will be placed under MHCB, and Mizuho Investors Securities Co., Ltd.
("MISC") will be placed under MHBK.
c) MHSC will transfer its retail business to MISC.
* MHFG will request to revise the Article 65 of the Securities and
Exchange Law to enable MHBK and MISC, and MHCB and MHSC,
respectively, to merge to enhance customer convenience.
d) A joint marketing relationship with Shinko Securities Co, Ltd. has
already been established for underwriting business.
(3) Strategically reorganize trust, asset management, and custody business
subsidiaries and place these companies directly under the new financial
holding company.
a) Unify the trust banking business, and centralize the management of the
group's trust and asset management sector including Trust & Custody
Services Bank, Ltd. ("TCSB") and asset management subsidiaries.
* Mizuho Trust & Banking Co., Ltd. ("MHTB") and Mizuho Asset Trust &
Banking Co., Ltd. ("MHAT") will be merged after placing MHTB, a
currently wholly owned subsidiary of MHHD, under MHFG.
* MHTB will secure its existing high credit rating.
* MHAT will separate and remove its NPLs that are classified as "need
special attention" or below and accelerate the final disposition,
utilizing a separate entity and/or framework for corporate revival.
* TCSB will be placed as a direct subsidiary under MHFG in order to
clarify its position as a common vehicle for asset management
business for the group, and provide high quality financial services
to customers not only for the group companies but also for
non-group companies.
2. Acceleration of NPL disposal and aggressive pursuit of the corporate revival
business based on the purpose of the Program for Financial Revival
(1) Further tighten assessment of assets by elaborating the self-assessment
standard.
a) Elaborate the self-assessment standard based on the "Framework of the
New Financial Administration" included in the Program for Financial
Revival.
* Elaborate the self-assessment standard, including application of
Discounted Cash Flow type methods to large borrowers who are
classified as "need special attention."
(2) Promptly conduct disposition or revival of the NPLs that are classified
as "need special attention" or below by separating these NPLs from the
group's banking sector through the utilization of a separate entity
and/or framework for corporate revival.
a) MHBK, MHCB and MHAT will separate and remove NPLs that are classified
as "need special attention" or below and accelerate their final
disposition and corporate revival.
b) Pursue early termination of the NPL issue, utilizing a separate entity
and/or framework for corporate revival.
c) Make a prompt assessment of NPLs as to the possibility of revival and
accelerate disposition or support by strengthening cooperation with
Resolution and Collection Corporation, Corporate Revivals Organization
and other corporate reconstruction funds.
* Having separated and removed NPLs, MHBK, MHCB and MHAT will
further strengthen their fund providing function in their
respective marketplaces.
3. Further reinforcement of financial strength
(1) Raise capital through the market in order to further reinforce the
financial strength.
a) MHFG will raise the capital necessary for this reorganization through
the market.
(2) Make a conservative review of deferred tax assets based on risk
scenarios.
a) Based on the "Framework of the New Financial Administration" included
in the Program for Financial Revival, MHFG will review its deferred
tax assets, estimating the taxable income conservatively based on risk
scenarios.
* Partially withdraw deferred tax assets.
4. Strict implementation of the "Mizuho Change & Speed-up Program"
On November 25, 2002, the Mizuho Financial Group announced the "Mizuho
Changing & Speed-up Program" including cost structure reforms and
strengthening of corporate governance as follows:
(1) Principal restructuring plans
a) Decrease in the number of board members, executive officers and
employees and salary cut
* Additional decrease in the number of board members and executive
officers (-20%), and 30% cut in yearly compensation
* Reduction of 6,300 employees, and average 10% cut in annual
compensation
b) Reduction of domestic branches and overseas offices
* Reduction of 120 domestic branches - 460 branches as of March 2004
(30% reduction compared with march 1999)
* Reduction of 13 overseas offices - 43 offices as of March 2004 (60%
reduction compared with March 1999)
(2) Strengthening of corporate governance
a) Achieve a management structure that is slim and speedy.
* Reduction in the number of board members and executive officers by
20%
b) Secure transparency in management and clear accountability.
* Increase in the number of outside directors
For Inquiries:
Public Relations
Mizuho Holdings, Inc.
Phone: 81-3-5224-2026
This information is provided by RNS
The company news service from the London Stock Exchange
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