Mizuho shuffles top management as losses mount

Terunobu Maeda is made chairman and Takashi Tsukamoto becomes the new CEO.
Following a dreadfully timed investment in Merrill Lynch, unexpectedly high exposure to the US subprime sector and losses relating to the Lehman Brothers bankruptcy, Mizuho Financial Group (MFG) appears to have taken the broom to its senior managers.

Previous MFG president and CEO Terunobu Maeda has been moved upstairs as chairman, and will be replaced by Takashi Tsukamoto, former deputy president. Two of the groupÆs units have also seen changes. At Mizuho Bank, the previous president and CEO Seiji Sugiyama, has been given the chairmanship, while Satoru Nishibori will take over as president and CEO. Mizuho Corporate BankÆs Hiroshi Saito is the third executive to become chairman, vacating the CEO and president position for Yasuhiro Sato. (Mizuho Bank works with small companies and retail customers, while Mizuho Corporate Bank works with blue chips.)

All eyes will now be on the new CEO. Tsukamoto, who is 58, is a Kyoto University graduate and Dai-ichi Kangyo Bank veteran. (The latter combined with Fuji Bank and Industrial Bank of Japan to form MFG in 2002). Unusual by Western standards, he has a strong background in human resources, as well as risk management and accounting. He also has extensive international experience.

Tsukamoto will surely find it hard to do worse than Maeda, who seemed to exhibit the æreverse MidasÆ touch'. In the first half of fiscal 2008 (to September 2008), MFG saw the value of its domestic stock holdings fall by Ñ125 billion ($1.3 billion) and the collapse of Lehman Brothers in Japan last year cost it a further Ñ30 billion. In retrospect, the share buyback programme that the company launched in 2007, and which it had hoped to continue over 2008-2009, was ill-timed. Equally unfortunate was the $1.2 billion invested last year in Merrill Lynch. Losses on securitised products have added to the companyÆs woes.

At the FY08 first half results announcement, MFG reported that net income had dropped by Ñ232 billion to Ñ95 billion. The company estimates the full year FY08 net income will amount to Ñ250 billion, down Ñ61.2 billion from FY07. Under Maeda, the company has had to revise its forecasts downwards several times.

In November last year, MFG announced plans to raise Ñ355 billion ($3.9 billion) in preferred shares to boost its capital base, and facilities are in place to raise more. Tsukamoto is certainly taking up the reins at a challenging time.
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