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Mizuho

Home / Posts Tagged "Mizuho"

Tag: Mizuho

Japan’s lost three decades – what are the causes?

The 1990s were called the Lost Decade in Japan, and then as the economy seemed to stagnate in the 2000s, it became the Lost Two Decades.  Now the Nikkei Business in a recent special series seems to be saying it has been a lost three decades.  Turnover and profitability were growing through to around 1990 when the economic bubble burst.  Then profits fell – although since 2010 they have been growing  again.  The total revenues of Japanese companies (excluding financial services) has been static, with only a small bump upwards around 2005-2008.

Nikkei Business says the lack of growth in turnover is the key problem. Even sales overseas, which were meant to be the growth driver, have not shown much of an upward trend.  According to Nikkei Business the root causes of this lack of growth are:

  1. low investment (1991 capital investment as a percentage of cashflow was 133%, compared to 82.2% in 2018)
  2. low wages (106.5 in 1990 indexed against 100 in 2015, down to 99.6 in 2019)
  3. low efficiency (return on assets was 4.3% in 1990, down to 3.8% in 2018)

It cites Panasonic as an example of #1. Every time profits rose, Panasonic increased its investment, but every time profits shrank, it cut investment back, since 2001.  As for #2, Nikkei Business lists all the major restructurings since 1999 with major Japanese companies, which makes for sobering reading for a country famed for lifetime employment:

  • 1999 – Nissan plan to cut 21,000 from its workforce, closing 5 factories
  • 2008 – Sony announced it would reduced its electronics workforce by 16,000
  • 2009 – Panasonic announced it would cut 15,000 people and 27 factories. Pioneer axed 10,000 jobs.
  • 2010 – All Nippon Airways proposed reducing its workforce by 16,000 as part of its revival plan
  • 2011 – Ricoh announced a mid term plan aiming at reducing its workforce by 10,000
  • 2012 – NEC announced a workforce reduction programme of 10,000 job cuts
  • 2013 – Fujitsu announced it that by axing its semi-conductor business, it would remove 5,000 jobs.
  • 2015 – Toshiba announce it would erduce its workforce by 15,0000
  • 2017 – Mizuho Financial Group announced an administrative work reduction programme targetting 19,000 roles.
  • 2019 – Nissan restructuring to impact 12,500 personnel

The low efficiency seems to be in the service sector, where there has been a lack of economies of scale.  The number of Japanese companies with turnover of over  Y100bn/$1bn doubled from around 40 to 80 from 1980 to 1991, but has not risen much since – apart from a blip in 2008 – after the birth of Japan Post, and is still heavily manufacturing oriented.

I will cover the analysis and suggestions from the rest of series for how Japan can “wake up” in my next blog posts.

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Japan’s megabanks lose popularity with Japanese graduate hires

It’s not surprising that Mizuho, one of Japan’s megabanks, has fallen in popularity from the top spot for 2018 new recruits to #17 for those graduates aiming to join in 2019, according to recruitment agency Disco.  As previously blogged, Mizuho’s former president, now chairman, Yasuhiro Sato has been very clear that the bank should lose around 30% of its workforce globally, through greater use of information technology, and yes, AI.  His successor Tatsufumi Sakai shows no signs of reversing this.

The other megabanks have fallen less dramatically out of favour, from #2 to #4 in the case of MUFG (dropping the Tokyo from Bank of Tokyo-Mitsubishi UFJ as of April 1) and from #5 to #14 in the case of Sumitomo Mitsui Banking Corporation.

Japan’s airlines JAL and ANA have stayed in the top 5, at #1 and #3 respectively. Perennial favourites, the trading companies Itochu and Mitsubishi Corp have also gained popularity, up from #7 to #2 and #9 to #6 respectively.

Manufacturers such as Toyota (#5 from #12), Sony (#11 from #31) and Denso (#19 from #33) have become more attractive, as graduates realise that the Internet of Things means traditional companies are now moving into more innovative IT related areas.

Japanese graduates who have studied at foreign universities favour foreign companies operating in Japan such as Procter & Gamble, Google and Amazon, or management consultancies, whereas no foreign owned company is in the top 10 for domestically educated Japanese graduates.

 

 

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Mizuho’s cure for headaches in the back office

With over 1000 employees in its London operations, Mizuho is #26 in our Top 30 Japanese employers in the UK, although it has not made any overseas acquisitions recently which might boost its size in the UK, unlike other Japanese financial institutions.  However it has been building up a war chest to acquire fintech companies – although what impact it will have on its employees is ambiguous, as the Financial Times claimed last month that Mizuho is aiming to shed around a third of its global workforce over the next ten years, through greater use of information technology.

This looks to affect the operations in Japan primarily, and will be through natural attrition as Japan’s rapidly ageing population means a large number of banking staff will in any case be retiring.

Mizuho Financial Group president Yasuhiro Sato has been very visible in the Japanese business media over the past few months, talking about the next phase of banking.  Mizuho was the result of the merger of Fuji Bank, Daiichi Kangyou Bank and the Industrial Bank of Japan in 1999, which in itself caused major headaches in the back office as it tried to integrate three different IT systems and multiple duplicate layers of bureaucracy, that are hard to eliminate in a culture where mass redundancies are taboo.

Sato says his strategy of One Mizuho is the answer to both the post merger integration and also the challenges that banks face post Lehman Shock.  One is to strengthen core capital, to ensure that major banks can never collapse again and the second is to ensure customer oriented business operations, as a financial intermediary rooted in real customer demands, with a strong sense of fiduciary duty.

One Mizuho should mean that customers are not simply offered loans or interest on their deposits but also other non-interest based investments, from the trust and securities side of the business.  The bank needs to become more like a consultant, listening to customers’ hopes, understanding their family structures.

Instead of acting as a main bank to Japanese industry as in the past, Mizuho is looking to incubate new companies and foreign companies, taking a 15% stake in a fintech venture.

Mizuho’s USP is that it is not a zaibatsu originated bank (unlike MUFG (Mitsubishi) and SMBC (Sumitomo and Mitsui) so it has a neutral view on Japan’s industrial structure which means that its industry research division is often called on by suppliers who want to bridge the various keiretsu (conglomerate) supply chains.

Mizuho has also teamed up with SoftBank to create J.Score, a service which provides loans to individuals such as students, using personal, non-financial information to give credit scoring.

Sato justifies the Mizuho mission of “Contributing to Japan, Asia and the world” (which I have to admit, I have teased Mizuho employees about, as it seems to imply in English that these are separate non-overlapping entities) by explaining that Japan is the pivot for the megabank and is Mizuho’s homeland.

 

 

 

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Japan’s megabanks most popular with Japanese graduates, electronics companies making a comeback

Japanese companies’ investment in their brand marketing, particularly their websites, may have more to do with attracting graduates from Japanese universities than attracting new customers in my experience.  Given that lifetime employment is still crucial to the big traditional companies (and still something many graduates aspire to), this is not surprising.

So Toyo Keizai’s survey of how the current graduate job seekers in Japan rate potential employers at the beginning and end of the recruitment process is a good indicator of the health of the brand and how well it was communicated to the job seekers.  This year the megabanks such as Mizuho (#1) and MUFG (#3)  are still in the Top 3 most highly rated employers even after the recruitment process, along with travel sector companies like ANA, JAL and JTB.  Other financial services companies like Nomura, Daiwa and Sompo are also in the top 10 with the other megabank, SMBC at #11.  This is much in line with the previous years’ graduates’ rankings.

Toyo Keizai notes that food and beverage companies seem to be increasing in popularity – Morinaga, Kagome and Kikkoman have all become more popular during the process and compared to last year.  Other major companies whose ratings improved dramatically over the recruitment process (so people got to like them once they met them) and are also more highly rated this year than by the previous year’s graduates include Panasonic (up to #39 from #156 last year at the beginning of the process), Mitsubishi Electric (#41 from #154) and Toyota (#35 from #57) and Fujitsu (#47 from #210).

Trading companies such as Mitsubishi Corp, Mitsui, Sumitomo Corp and Itochu whilst still in the top 50, seem to have lost popularity compared to last year.

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What Japanese banks, trading companies look for in graduate hiring

shukatsu-seminarShushoku Katsudo, the graduate hiring process in Japan, reaches a peak towards the end of the year, as the naitei (informal offers) from the big firms have mostly been issued, and the smaller firms and the unlucky graduates desperately try to find solace in each others’ arms.  The process is meant to start in April, when students put on identical suits and attend countless company presentations and interviews, thereby pretty much wiping the final year out in terms of getting any studying done.  Japan’s universities mostly function on the American credit system, so there is not the pressure of ‘finals’ as you get in British universities, however Japan’s academics regularly complain about the damage done to the educational experience by the system.   There have been attempts to move the start date to August, so that students can do some studying in the first term, but unfortunately, with a shortage of skilled labour, it’s too tempting for most firms not to try to buck the system.

The Nikkei Business magazine ran a series in December to guide students through the process, explaining what financial services companies and trading companies are looking for and offering.  I thought I would share it, as it gives a flavour of the corporate culture of these elite employers who are active outside Japan.  I was interested to see how much better paid on average the trading companies’ recruits are than the financial services companies, and that a global mindset is mentioned regularly amongst the financial services, but not by the trading companies – presumably a global outlook is taken for granted.

In terms of overseas experience, the Nikkei says that some of the bigger banks send out several hundred people a year to overseas postings, and this is not just to support Japanese companies overseas, but increasingly to build business with local companies too.  English ability is not compulsory, but likely to be offered as training after entry.

The image of trading company employees is that they have to be able to speak English, are strong drinkers and sporty.  The trading companies themselves say English ability is not compulsory and there are even some naitei offers to people who don’t have a passport.  However all trading companies point out that they usually expect one of the three rotations in the first 10 or so years to be overseas.  The trading companies say it is not necessary to drink, but obviously it’s a bit awkward if your counterpart is a brewery.  Sportiness is not actively sought, but it’s true that on campus recruitment by employees may well focus on students who were in the same club as them.

Bank of Tokyo-Mitsubishi UFJ

Offers naitei to 1300 graduates, starting salary is Y205,000 (around £1200) a month. Average salary of all employees is Y7.91m (around £46K). They are looking for healthy curiousity, and eagerness to take up challenges

Mizuho Financial Group

Offers naitei to 1920 graduates.  Starting salary the same as BTMU. Average salary of all employees is Y7.38m (around £43K).  They are looking for intellectual curiousity, a global mindset and dynamism.

Sumitomo Mitsui Banking

Offers naitei to 1800 graduates.  Starting salary the same as BTMU and Mizuho. Average salary of all employees is Y8.79m (£51K).  They are looking for people who are good at building relationships and have a global awareness.

Nomura

Offers naitei to 600 graduates.  Starting salary is Y232,300 a month (£1350).  Average salary of all employees is Y11.93m (£69K).  They are looking for people with ambition, honesty and flexibility.

Daiwa

Offers naitei to around 690 graduates. Starting salary is Y240,000 a month (£1395). Average salary of all employees is Y10.02m (£58K). They are also looking for honesty but also a strong spirit of enquiry

Sompo Japan Nipponkoa

Offers naitei to around 750 graduates.  Starting salary is Y237,860 a month (£1383).  Average salary of all employees is Y6.6m  (£38K).  SJNK is looking for “ability to stand on your own feet”

 

Trading companies:

Itochu

Offers naitei to around 142 graduates (out of 7000 applications). Starting salary is Y240,000 (£1395). Average salary of all employees is Y13.95m (£81K).  They are looking for honesty and optimism

Mitsubishi Corporation

Offers naitei to around 160 graduates (out of 6000 applications).  Starting salary is the same as the other trading companies.  Average salary of all employees is Y13.75m (£80K). They are looking for trustworthiness, strength and intellectual ability.

Mitsui

Offer naitei to around 120-150 graduates (out of 6000 applications). Same starting salary as the other trading companies.  Average salary of all employees is Y13.61m (£79K).  They are looking for intellectual curiosity, ambition, ability to develop yourself

Sumitomo Corporation

Offer naitei to around 130 graduates (out of 7000 applications).  Same starting salary as the others.  Average salary of all employees is Y13m (£76K).  They are looking for ability to innovate, execute and collaborate

Marubeni

Offer naitei to around 122 graduates (out of 7700 applications).  Same starting salary as the others.  Average salary of all employees is Y13.06m (£76K).  They are looking for people who stand up for themselves and don’t run away (!)

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Shiseido top the employer rankings for women in Japan for the second year

shiseidoJapanese cosmetics and skincare company Shiseido has topped the 2015 “Companies where women flourish” rankings by the Nikkei Woman magazine.  The metrics used are

  • Proportion of women managers
  • Work/life balance
  • Use of women
  • Equality between men and women

Other companies who  have done well include All Nippon Airways (up from #6 to #3), and Mizuho – unlisted previously, and now at #17.  As always, the life insurance companies do well (they traditionally have used a large number of women in their salesforces) as do non-Japanese companies such as IBM Japan (down from #3 to #6), Janssen (previously unlisted, now #13), Eli Lilly (#18, down from #14) and Accenture (previously unlisted, now #20, bumping Hewlett Packard out of the top 20).

The article that accompanies the rankings points out that in some ways Shiseido has become tougher on the women in its workforce.  Previously there had been a big increase in female beauty consultants/shop assistants working “short shifts” so they could balance childcare with work, but now even those on “short shifts” are expected to take their turn to work on Saturdays or work in the evenings.

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Most popular companies with Japanese graduates

I alway find the rankings published each year by various organisations in Japan of which companies are most favoured by university graduates fascinating reading, giving insights into how the economy and societal trends have impacted the reputation of Japan’s blue chips.

The Nikkei Business magazine has focused on the rankings produced by Rakuten’s social networking site for graduates, the biggest of its type in Japan, this year.

Travel companies seem to have done particularly well this year overall – All Nippon Airways is top of the rankings (up from #2) Japan Travel Bureau at #3 (up from 8) and JAL resurgent after its successful restructuring in at #4 from no rank last year.  Maybe this is due to the high profile activities of these companies in trying to get more tourists to Japan, especially in light of the 2020 Tokyo Olympics.

Advertising agencies are also back in favour – Number 2 is Dentsu, the mammoth advertising agency (up from #3), Hakuhodo is at #6 up from #14 and ADK has risen from 112 to 78.

Banks have lost ground –  Bank of Tokyo-Mitsubishi UFJ has dropped to #5 from #1, Sumitomo Mitsui Banking Corp slipped from #6 to #9 and Mizuho is down to #13 from #9 but insurance companies seem to be popular again – Sompo Japan is up to #65 from 128 and Sumitomo Life also rising from 151 to 68.

Other big fallers are Ajinomoto (down to #23 from #11), Mitsubishi Corporation (down to #26 from #13), P&G Japan (down from 10 to #39, whereas domestic rival Kao has improved from #23 to #11) and Canon (down at 94 from 54, presumably following some disappointing financial results in 2013), Lotte (down to 89 from 56), NTT Docomo (86 down from 52).

Graduates from the top ten universities heavily favoured trading companies (Mitsui, Mitsubishi Corp, Itochu, Marubeni and Sumitomo Corp all in their top 10) and advertising agencies (Dentsu and Hakuhodo)

Reasons for favouring certain companies:

I could become President, have authority to make decisions – trading companies ranked highest

I can become a specialist in a certain field and lead projects – Toyota, Kawasaki Heavy Industries

My seniors recommended it – Tokio Marine Insurance, Yokohama Bank, Bank of Tokyo Mitsubishi UFJ

My parents/teachers recommended it – All Nippon Airways, Japan Rail, Mitsubishi Corp, Bank of Tokyo Mitsubishi UFJ

 

 

 

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Another miserable week for Mizuho

Further pain for YasuhirMizuho Okabeo Sato, President of the newly merged Mizuho Bank, following his preemptive interview in the Nikkei Business magazine last month (summarised by Rudlin Consulting here) which was shortly followed by Mizuho being the subject of a business improvement order.

Mizuho had said previously,in response to investigations by Japan’s Financial Services Authority, that its executives had no previous knowledge of loans to organised crime via the old Mizuho Bank (retail side)’s subsidiary, Orient Corp.  Sato has now had to admit that his predecessor-but-one, Satoru Nishibori, had been told.

A Nikkei editorial says “the sudden about-face, made at a press conference Tuesday, underscores the sloppiness with which Mizuho is handling the matter. The news is unsettling because public trust is a bank’s most important asset.”  It does go on, however, to point out that Mizuho is not alone in making such loans.

Sato has felt obliged to resign from all public positions, including his role as a private-sector member of the Council for Industrial Competitiveness, to focus all his energy on cleaning up the mess.

Orient Corp was a subsidiary of one of the original banks that Mizuho was formed from, Daiichi Kangyo Bank, and is of course therefore staffed by “alumni” of DKB.  Sato comes from the Industrial Bank of Japan, one of the other original banks, and would therefore not have many back routes into DKB’s subsidiaries, possibly also “respecting” their expertise in consumer financing, the same way Kao “respected” Kanebo’s cosmetics expertise.

A third party committee is being set up to investigate further and in the meantime it’s pay cuts and much deep bowing all round…

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Last updated by Pernille Rudlin at 2019-11-27.

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