Mizuho’s surprise $6bn charge shows risks of yield quest
The Japanese financial services group slashes its net income forecast by 86%
Tokyo — Japanese banks’ quest for yield is creating more turbulence, with Mizuho Financial Group announcing another round of losses on its foreign-bond holdings as part of a surprise writedown that will severely curtail full-year profit. Mizuho slashed its net income forecast by 86% on Wednesday after booking ¥680bn ($6.1bn) of charges tied to business restructuring and securities losses. CEO Tatsufumi Sakai said he will forfeit his performance-related pay to take responsibility for the writedown. The charge underscores the challenges faced by Japanese banks as rock-bottom interest rates at home prompt them to look abroad for returns. It also reflects Mizuho’s plans announced in November 2017 to eliminate branches and jobs over a decade in a bid to counter headwinds including financial technology disruption and tepid credit demand from a shrinking population. “Bank shares were struggling in any case because negative rates were hurting their performance,” said Shinichi Tamura, a Toky...
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