Mizuho Bank defies the trend as it acquires Greenhill & Co., bolstering its US presence amid foreign bank departures. Discover the significance of this strategic move and its impact on the American financial landscape.
Mizuho Bank CEO Tatsufumi Sakai, the Japanese mega-lender revealed Monday that it is purchasing New York-based Greenhill & Co. at a time when more foreign banks appear to be leaving than entering the country.
Foreign banks haven’t always done well in the United States. BNP Paribas of France, BBVA of Spain, and HSBC of the UK have all sold a significant portion of their US operations in the past two years, on average.
Financial Times editor Patrick Jenkins stated in an opinion piece that “European banks have underperformed, having attracted second-tier staff, second-rate clients, and what a former bank boss calls a “major negative selection issue” on strategy.”
Foreign banks frequently encounter difficulties because they try to perform everything — asset management, commercial banking, sales and trading, and equities research — the same way they do at home. But domestic legacy lenders with a lengthy history, such as JPMorgan, Goldman Sachs, Morgan Stanley, and CitiGroup, already controlled that market for everything everywhere at once.
However, Mizuho remains undeterred by their poor record. The Japanese bank, renowned for its ambitious approach, is optimistic about the integration of Greenhill, a well-known M&A firm, into its existing services in the United States. Jerry Rizzieri, president and CEO of Mizuho Securities USA, expressed confidence in the $550 million, all-cash acquisition, stating that Mizuho offers a comprehensive range of products, including debt, equity, capital markets, derivatives, fixed income and equity sales and trading, as well as securitization. The addition of M&A capabilities fills a previously missing component.
This move reflects the ongoing trend of Japanese companies seeking to enter the US investment banking market. Last month, Sumitomo Mitsui Financial Group announced its plans to expand cooperation with Jefferies Financial Group, aiming to strengthen its US capital markets and M&A operations. During the Great Recession, Morgan Stanley and MUFG formed a partnership focused on corporate and investment banking, with the Japanese bank acquiring a 21% interest in the American lender.
Take That to the Bank: Foreign lenders who have succeeded in the US frequently did so by taking a patient approach, going local, and concentrating most of their efforts on a single service. For instance, the Spanish bank Santander has particularly focused on becoming the North East’s go-to source for subprime auto loans. People who were turned down by domestic banks during the epidemic and had just received their Covid relief monies started going to Santander when they needed a new car. In the end, Santander’s US operations were more profitable than its Spain, Brazil, and UK divisions.