Mizuho group to merge retail, corporate banking units+

TOKYO, May 18 Kyodo -
Mizuho Financial Group Inc., one of Japan's biggest banking groups, plans to merge its two core banking units, Mizuho Bank and Mizuho Corporate Bank, following massive computer system trouble in March, sources close to the matter said Wednesday.
The planned overhaul of the group, expected to come as early as 2013, is intended to streamline management and decision-making processes as a way to prevent a similar embarrassment, the sources said.
The trouble, which came to light March 15, was triggered by donation transfer requests overwhelming Mizuho Bank's processing capacity after the March 11 quake, stalling salary transfers, crippling automated teller machines and creating a backlog of up to 1.16 million unprocessed transactions.
Mizuho Bank President Satoru Nishibori is expected to step down in June to take responsibility over the glitch, to be replaced by Takashi Tsukamoto, the current group president. Mizuho Corporate Bank President Yasuhiro Sato is expected to become the head of the financial group while concurrently serving as the corporate bank president.
The banking group is expected to announce the reorganization plan early next week when it unveils preventive measures against system glitches, the sources said, adding it will also consider integration of the banking units' systems.
Mizuho Financial Group, the second biggest banking group in Japan in terms of assets, is a product of the merger of three major Japanese commercial banks -- Dai-Ichi Kangyo and Fuji banks and the Industrial Bank of Japan.
The group also experienced a major computer glitch in 2002 and was slapped with a business improvement order by the government's financial industry watchdog.
The Financial Services Agency is expected to punish Mizuho again over the recent computer system failure, prompting the banking group's decision to carry out a top management reshuffle and cut executive pay.
In the group, Mizuho Bank serves retail clients and small businesses while Mizuho Corporate caters to big Japanese businesses and overseas corporate clients. The group also has securities units and an asset management bank.
The inefficiency that arises from having two core units under the holding firm has long been criticized for hobbling the group's earnings growth in comparison with those of other so-called megabanks such as Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc.
Mizuho also has a lot of catching up to do because while it is busy reorganizing itself, other major banks are increasingly striving to boost their profits in promising markets outside Japan.
==Kyodo
2011-05-18 21:44:19