Japan’s Mizuho Buys US Investment Bank GreenHill for $550 Million

Play The Godfather theme song because Mizuho Bank CEO Tatsufumi Sakai believes in America.

At a time when more foreign banks seem to be going rather than coming, the Japanese mega-lender announced Monday it’s buying New York-based Greenhill & Co.

Let Us In

Historically, foreign banks haven’t had the best success in America. In roughly the past two years, France’s BNP Paribas, Spain’s BBVA, and the UK’s HSBC have all sold much of their US operations.

“European banks have underperformed, having attracted second-tier staff, second-rate clients, and what a former bank boss calls a ‘serious negative selection issue’ on strategy,” Financial Times editor Patrick Jenkins wrote in an opinion piece.

The problem foreign banks often run into is that they’re trying to do it all — asset management, commercial banking, sales and trading, equity research — just like they do back home. But domestic legacy lenders like JPMorgan, Goldman Sachs, Morgan Stanley, and CitiGroup already cornered that everything-everywhere-all-at-once market a long time ago.

But that dismal track record isn’t stopping Mizuho. The Japanese bank considers itself a big game hunter, and is bullish on adding Greenhill, which is well known for its M&A division, to its other services in the States:

• “Mizuho offers a full complement of products ranging from debt, equity, capital markets, derivatives, fixed income and equity sales and trading, securitization,” Jerry Rizzieri, the president and CEO of Mizuho Securities USA, told Bloomberg of the $550 million, all-cash deal to buy Greenhill. “The piece that’s been missing has been M&A.”
• This is only the latest push by a Japanese firm to get involved in the US investment banking sphere. Last month, Sumitomo Mitsui Financial Group announced it’s expanding its partnership with the Jefferies Financial Group to bolster US capital markets and its M&A business. MUFG has ties with Morgan Stanley going back to the Great Recession, when the Japanese bank bought a 21% stake in the American lender and the two formed an alliance to focus on corporate and investment banking.

Take That to the Bank: Of the foreign lenders who have found success in the US, it’s often thanks to a slow and steady approach, going regional and focusing much of their efforts on a particular service. For instance, Spain’s Santander has really honed in on being a go-to name for subprime auto loans in the North East. During the pandemic, people who were rejected by domestic banks and had just gotten their Covid relief funds began turning to Santander when they wanted a new car. Santander’s US operations went on to be more profitable than the group’s Spain, Brazil, and UK units.