Mizuho Financial Group Inc is to purchase Royal Bank of Scotland Group PLC’s (RBS’s) US and Canadian loan commitments for a reported $3 billion (£1.95 billion).
Japan’s second-largest lender by assets, Mizuho said in a statement today (February 26th) it will acquire $36.5 billion in corporate loans and commitments from RBS in a bid to boost its global presence in corporate lending and debt issuance.
This announcement comes as RBS announced it made a loss of £3.5 billion for the past year, although it was an improvement on the £9 billion lost during the year before.
RBS is 79 per cent-owned by the British taxpayer following the government’s rescue plan in 2008. It has experienced some challenging times in the past 12 months. In October, the bank set aside £400 million to help cover the potential costs of an investigation into alleged manipulation of the foreign exchange market.
Cash-rich Japanese banks
It came when RBS seemed to be performing relatively well with pre-tax profits growing by £260 million to £1.27 billion. Both RBS and Barclays stated they were putting money aside pending the outcome of the investigation.
Meanwhile, Mizuho and other Japanese financial institutions have been buying assets and extending loans overseas to compensate for a weak domestic market, with soft demand for loans and low interest rates.
Japanese banks owns large amounts of liquidity to spend overseas and have expanded their presence in other Asian markets in recent year. Mizuho is also in talks with Philippine conglomerate San Miguel Corp. about buying its 60 per cent stake in Bank of Commerce, the Wall Street Journal reports.
The deal with RBS is likely to close around the middle of the business year starting in April.