Mizuho Financial Group plans to nearly double its wealth management clients by tapping into new cash-strapped millionaires who need funding beyond the capabilities of their startups.
Japan's third-largest bank aims to have 1,000 families into its wealth unit by the same time next year, said Masayuki Sakai, general manager of the bank's wealth management strategic project team, jumping from 600 now. Much of this growth is expected to come from loans to start-up owners, whose equity holdings have grown sharply in the wake of initial public offerings, while their cash income remains modest.
“There are a lot of people who don't own their homes,” Sakai said in an interview, adding that many need the cash to expand business and invest in other projects. "We would like to respond to their financing needs in a timely manner," he added.
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Mizuho's deeper approach to wealth management is a sign of fierce competition in an already fiercely contested market. Mitsubishi UFJ Financial Grou, Sumitomo Mitsui Financial Group and Mizuho themselves have positioned business as a strategy in recent years, as extremely low interest rates Reduce the profits of traditional lending.
rich families
Sakai reported that about 90% of the profits in the wealth management division come from business owners, and that the main clients are from families with assets of more than 3 billion yen ($25 million).
While Mizuho Bank has been offering private banking services through its various subsidiaries for years, it has made some recent regulatory changes to fine-tune its approach. For example, the bank set up the Wealth Management Strategic Project Team in April 2020, and established a group of bankers called Wealth Advisors within the core banking unit in July of last year. It currently employs about 30 wealth advisors.
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Serving business owners through private banking transactions, Sakai said, can often lead to more work for companies they have connections with. He stated that Mizuho provides financing to millionaires in the IPO, backed by the owners' shares as collateral.
"Equity-backed loans are one of the tools for establishing long-term relationships with these new fortunes," he concluded. "Good feedback from one of the other clients is likely to prompt follow-up."
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