Masahiro Kihara, the CEO of Mizuho Financial Group, recently highlighted the importance of investing in Rakuten Group’s card company and nurturing collaborations with the Rakuten Group as pivotal steps for enhancing deposit collections. With the Bank of Japan's recent decision to end negative interest rates for the first time in 17 years, banks are eager to increase their deposits, which serve as the foundation for lending and interest income.
During his Bloomberg interview, Kihara emphasized, "The key to increasing sticky deposits, which are those remain with the bank for the long term, lies primarily in payment and salary transfers." This statement reflects the competitive environment among banks striving to attract these types of deposits.
The recent announcement of Mizuho's plan to invest ¥165 billion (approximately $1.5 billion) for a 14.99% stake in Rakuten Card underlines the bank’s strategic direction. Beginning December 3rd, Mizuho will launch the “Mizuho Rakuten Card,” which offers significant benefits to customers who designate Mizuho Bank as their transaction account. The card allows users to earn Rakuten points, fostering loyalty within the Rakuten ecosystem.
By creating accounts targeted for payroll deposits and credit card payments, Kihara sees the potential for enhanced customer transactions. He noted, "If we can increase sticky deposits, there’s also the possibility of customers engaging in other transactions with us." This synergy between banking services and customer engagement could yield substantial benefits for Mizuho.
Notably, Mizuho Financial Group has also made significant investments through its securities subsidiary, owning 49% of Rakuten Securities. This strategic alignment with Rakuten not only deepens financial ties but also expands Mizuho's footprint within Japan’s increasingly digital banking environment.
With the upcoming inauguration of Donald Trump as the next U.S. president, there is renewed optimism about mergers and acquisitions (M&A) activity. Kihara regards the American business climate as favorable, predicting active M&A transactions involving U.S. companies will emerge. This strategic optimism, focused on cross-border mergers, aligns well with Mizuho's acquisition of the advisory firm Greenhill and their aim to leverage this investment for future opportunities.
Overall, Kihara’s investment approach not only signifies Mizuho’s effort to bolster its deposit strategies but also reflects broader trends within the banking industry amid changing economic landscapes. By capitalizing on Rakuten's existing customer base through its innovative card offerings and collaborative ventures, Mizuho is positioning itself for growth and increased competitiveness.
