Posted by: Ian Rowley on January 16, 2008
Mizuho execs might have expected more following the first big investment by a Japanese bank in a U.S. rival in twenty years, but it wasn’t to be. Today, shares in Mizuho, Japan’s second biggest bank by assets, slipped by 8.7% after it said it will take $1.2 billion stake in Merrill Lynch.
Mizuho’s stock performance was worse than the market as whole, which fell 3.3% to its lowest level in over two years, and its major rivals Mitsubishi UFJ and Sumitomo Mitsui, which lost 4.7% and 3.1% respectively. Critics complained the deal was risky and not large enough to give Mizuho large much sway at Merrill.
Still, Mizuho isn’t the only Japanese banking stock that can be forgiven for thinking life rather unfair. Plunging stock prices at Japan’s “mega banks” banks have been a feature of the sub-prime debacle, despite relative small exposure compared to American and European peers. Even before today’s trading, Mitsubishi UFJ and Sumitomo Mitsui’s stock prices had fallen around 20% since the sub-prime woes in U.S. began grabbing headlines in August. Meanwhile, Mizuho’s stock price has fallen 34% during the same period, compared to with a 27% fall in Merrill’s stock. In November, Mizuho said its exposure to sub-prime in the U.S. was $650 million, compared to the U.S. institution’s $8 billion write-down in the third quarter.