Japan’s Mizuho Financial Group Inc. has announced plans to deploy several billion dollars in riskier investments to companies in need of capital to weather the difficulties they face as a result of the coronavirus pandemic.
The bank’s Chief Executive Officer, Tatsufumi Sakai, is holding discussions with corporate clients on providing finance via subordinated loans and purchases of preferred shares amounting to more than ¥100 billion. Though he states that this figure is likely to increase.
Mizuho adapting its finance business
Mizuho, which is Japan’s third-largest bank, has been focusing on building its mezzanine and equity financing business to counter dwindling profits on regular loans due to low domestic interest rates. Sakai believes many firms will take advantage of the alternative funding on offer to see them through the current COVID-19 crisis.
“The economic situation is worse than it was during the Lehman Brothers collapse,” he said, referencing 2008’s global financial crisis. “I have no doubt it will get far worse ahead.”
Some firms might use the funds to acquire assets as they decline in value, or to reorganise their global supply chains to avoid future disruptions as experienced by many companies recently
Companies take advantage of new lending opportunities
Sakai predicts that the uptake for the type of finance Mizuho plans to provide will be significant, even with companies that have not been seriously impacted by the coronavirus recession. Some firms might use the funds to acquire assets as they decline in value, or to reorganise their global supply chains to avoid future disruptions as experienced by many companies recently.
The bank has also noticed an increase in demand for regular loans with Mizuho receiving requests for loans and other financial services amounting to around ¥17 trillion, including ¥4 trillion overseas, and has provided ¥10 trillion.
Push towards digital banking
Another area Mizuho has been developing is its move towards digital banking. With businesses pushing towards a new teleworking model, being able to conduct transactions online is more important than ever before.
The bank has been focusing on creating a system of electronic contracts which allows companies to complete financing applications remotely, without having to physically stamp the documents with traditional hanko seals. So far, around 8,000 companies have used these contracts, and Mizuho expects this number to increase to 14,000 by the end of this year.
The finance group has also installed tablets in all its branches, replacing paper with digital documents.
Have you tried out any of the new digital banking systems or services mentioned in the article? How did you find the experience? Let us know in the comments
"Otsumami" - a bite size snack:
Financial solutions are available in many forms to help companies get through the coronavirus recession in Japan.