According to media reports and Bloomberg article published on October 14, 2022, Mizuho Financial Group Inc. has emerged as a suitor for at least part of Credit Suisse Group AG’s securitized products group as the Swiss bank moves closer to a final deal, according to people with knowledge of the matter.
The Japanese bank is competing against parties including Apollo Global Management Inc., Centerbridge Partners, Pimco and Sixth Street, said the people, all of whom requested anonymity discussing private information.
Tokyo-based Mizuho, led by Chief Executive Officer Masahiro Kihara, recently said securitized products are a “core pillar” of its markets business in the Americas. The US is “a super-important market. It’s the second-biggest revenue and profit generator after Japan,” Kihara said in an interview in April, adding that there’s more room for what the bank can do in America.
“We will update on progress on our comprehensive strategy review when we announce our third-quarter earnings; it would be premature to comment on any potential outcomes before then,” a Credit Suisse representative said in an emailed statement. A Mizuho spokesman declined to comment.
Any potential deal would be among Mizuho’s largest since buying a portfolio of North American loans from Royal Bank of Scotland for about $3 billion in 2015. Kihara, promoted to the top post in February, has already recently moved to buy a minority stake in a rival brokerage for 80 billion yen ($543 million).
“It is natural for Mizuho to consider any deal as long as it can expand overseas business by acquiring at a discount or at a reasonable price,” said Shin Tamura, an analyst at Bloomberg Intelligence. Still, securitization is a business that caused a loss for the bank which was the largest of any Japanese lender during the subprime mortgage crisis, he added.
Profitable
Credit Suisse has said the securitized products platform is highly profitable and employs about $20 billion in risk-weighted assets and roughly $75 billion of leverage exposure, which is a regulatory measure of assets.
The SPG business, led since 2016 by New York-based Jay Kim, buys and sells securities that are backed by pools of mortgages and other assets, such as car loans or credit-card debt. The division also provides financing to clients who want to buy these products and will securitize loans -- dice them into new securities of varying risk and return -- on their behalf and sell them to investors for a fee.
