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Global Products Unit

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Head of Global Products Unit Shinji Taniguchi

We aim to improve our ability to respond to customer needs and to become a "products consulting unit" that displays a high level of expertise on a global basis.

Medium– to Long–term Unit Strategy

The Global Products Unit consists of an investment banking business and a transaction banking business. It acts as the product function platform for the entire group.

As the global economy becomes increasingly uncertain, the risk of price fluctuations in stocks, bonds, real estates and commodities is becoming greater. Our customers' needs are becoming more sophisticated and diverse as companies become more globalized. Furthermore, transformations in the business environment are gathering speed with technological innovations such as Fintech.

The unit's strengths are our close collaboration with group companies such as banking, trust banking, and securities, and our expertise and know–how on products. At the same time, expansion into new business sectors is a challenge that we must tackle in order to respond to changes in economic and social environments.

Given the current circumstances, we will aim to become a "products consulting unit" that displays advanced expertise and delivers optimal solutions to meet our customers' needs. We will do this by further refining our operational framework and platform on a global basis, as well as by expanding new business domains.

In the global transactions sector, we will boost our ability to provide our customers with services by realigning our organization, for example by creating a one–stop system capable of handling trade finance and cash management, and by establishing a global collaboration structure between our offices.

We will also respond seamlessly to our customers' needs and support their corporate growth by offering a wide range of products and solutions that are appropriate for their development stage. We will leverage our banking, trust banking, and securities functions not only in our M&A advisory and financing business and when serving as an intermediary in the real estate sector, but also in currency transactions and when we serve as the IPO bookrunner or transfer agent when a company becomes listed on the stock exchange.

In addition, we will contribute to the growth of industries and meet social needs by supporting companies' globalization, in each sector and through initiatives to expand the use of renewable energy by funding the solar power and wind power industries.

We will also boost user–friendliness for our customers by expanding new business domains using technology, as in the construction of the API* for the secure connection of Fintech services in the online banking sector, and initiatives utilizing blockchains in the trade finance business.

Through such initiatives, we will aim to become a "products consulting unit" and to contribute to greater convenience for our customers and to social progress.

  • *Application Programming Interface: Programs and interfaces used to connect systems to external services, etc.

Fiscal 2016 Results and Plans for Fiscal 2017 and Beyond

Our investment banking business and transaction banking business both achieved good results overall in fiscal 2016.

In the M&A sector, we worked on large–scale transactions as well as meeting business succession needs of middle–market corporations. We engaged in a total of 182 transactions during the fiscal year, involving a total amount of JPY6.9 trillion, winning us the top slot in the league table for both the number of deals and the amounts.

Similarly, in the syndicated loans sector, we placed top for the eighth year running as the market leader for syndicated loans in Japan.

We also performed well overall in the league tables for domestic project finance and other sectors, as well as in external evaluations in the transaction banking sector.

In addition to these achievements, we launched various new initiatives in our business sectors, leveraging the unit's strength in integrating banking, trust banking, and securities entities. In the real estate sector, we created new business opportunities through alliances with our subsidiary Simplex, such as establishing a private placement REIT. In the project finance sector, we provided investment opportunities in global project finance receivables for investors in and outside Japan through the securitization of loan receivables.

We also reorganized our middle–market M&A advisory business and global transactions business as a way to improve customer convenience. In addition to endeavouring to provide meticulous services, we started accepting corporate account applications online as a way to save customers' time.

In order to sophisticate group–wide value chains that organically combine multiple solutions, in fiscal 2017 we will further strengthen the unit's internal and external collaboration, and move forward with expanding and optimizing the breadth of the solutions we provide by giving greater emphasis to fostering human resources and reinforcing their expertise. The expansion of new business domains to accommodate the needs of our customers and of society at large is an ongoing task from fiscal 2016. We will work to achieve that aim by drawing upon the diverse expertise of the group and collaborating with other in–house companies and units.

Facing major changes in the external environment, we will provide product support for the group, and contribute to resolving the various issues of our customers and of society.

1. Current Environment

External Environment

Economy, Regulations, and Competition
  • Increasing risk of price fluctuations in stocks, bonds, real estate, and commodities
  • Commoditization of a wide variety of products
Customers
  • Increasing need for asset management in a low interest rate environment
  • Increased M&A activities for business transformation such as succession and expansion beyond the borders
Society
  • Introduction of new settlement businesses by Fintech ventures, etc.
  • Expansion of high quality infrastructure investments and concession business*
  • Entry of non–financial institutions
  • *Arrangements under which the operation of public facilities, etc., is assigned to a private-sector business, while the ownership of the facilities remains with the public sector.

Internal Conditions

Strengths
  • Enhanced collaboration among group companies
  • Expertise and know–how to achieve a high level of performance in a wide range of areas in the investment banking and transaction banking businesses
  • Operational framework and platform that cut across customer segments on a global basis for each product
Challenges
  • Create a room for new risk asset investment and boost ROE
  • Accelerate development of new products that respond to technology innovations and changes in the business environment
  • Manage human resources more efficiently

2. Value Creation

Value for Customers

  • Value chains that combine multiple solutions through collaboration among group companies
  • Optimal solutions for customer's business strategies, such as M&A and IPOs
  • Support for customers expanding globally through our office network that connects the world in a wide range of product areas

Value for Society

  • Contribute to companies' globalization through support in such areas as M&A and transaction banking
  • Contribute to the growth of various industries by providing solutions in the light of policy backing for infrastructure export and concession business
  • Provide solutions that respond to social changes by developing new products that incorporate advanced technology
  • Facilitate the greater use of renewable energy through means such as supporting the solar power and wind power industries

3. Business Plans

Risk Appetite Policy

  • Offer product functions cross–sectionally to in–house companies and entities with the aim of expanding the group's non–interest income business
  • Maintain asset liquidity for ultra–long–term assets and non–yen currency assets in the light of regulations and market trends
  • Explore new business domains by developing products that use latest technologies, including non–conventional products

Action Plans

  • Respond to a wide range of customer needs by seamlessly offering diverse products that integrate our group companies' banking, trust banking, and securities functions
  • Strategically reduce risk assets to generate new asset investment reserves and achieve a high ROE
  • Leverage our product expertise and market sensitivity to open up new business domains
  • Further boost productivity through the use of advanced technology and streamlining the organization

2016 HIGHLIGHTS

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Accomplishments in Investment Banking
  FY2016 Results
M&A Advisory for Announced Deals (Japan corporations)1 No. 1
Project Finance (Japan)2 No. 1
Syndicated Loans (Japan)3 No. 1
ABS Lead Manager4 No. 1
Japan Publicly Offered Bonds (Industrial bonds & electric power bonds)5 No. 1
  • 1.Number of deals basis, excluding real estate deals
  • 2.Amount basis, bookrunner basis
  • 3.Amount basis, bookrunner basis
  • 4.Amount basis, asset–backed securities
  • 5.Underwriting amount basis, excluding own bonds

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Accomplishments in Transaction Banking
  FY2016 Results
CMS1 No. 1
Custody (Sub–custodian)2 No. 1
  • 1.Cash Management Service Mizuho won the first place in terms of customer satisfaction in the CMS ranking survey of Asia Money magazine (in the Japanese market, covering companies with large sales).
  • 2.Securities custody and administration for securities investments Mizuho won the first place in custody bank survey rankings in Japan in both Global Custodian magazine and Global Investor magazine.

Solutions that Support Sustainable Growth for Our Customers and Society

Maintaining Close Relationships with Customers Listing

– IPO bookrunner and stock transfer agent –

The Global Products Unit provides services for customers considering an IPO, with MHSC serving as the bookrunner and MHTB as the stock transfer agent. Collaborations among group companies allow us to efficiently provide our customers with multiple services.

In fiscal 2016, MHSC served as the bookrunner in 16 deals, and MHTB provided stock transfer agent services for roughly 60% of those customers. We will continue to promote collaboration among group companies to provide solutions that meet the comprehensive needs of our customers.

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  • 1.Prepared using CAPITAL EYE based on large financial institutions. Excludes REITs and global offerings
  • 2.Prepared using disclosed materials from each company. Excludes REITs, ETF, and professional market.

Collaborations with Regional Financial Institutions

– Regional banks have started to handle MHTB's living trusts –

Living trusts are products where, as the trustee, MHTB takes custody of monetary asset as trust property. It is transferred to the beneficiary(ies) based on the conditions laid out beforehand in contract when the need of property inheritance arises.

Hokkaido Bank and North Pacific Bank began handling MHTB's living trusts on October 3, 2016 and February 1, 2017 respectively. With the aging of the population, there is growing interest in asset succession and inheritance. We will continue to work in alliance with regional financial institutions to meet the diverse needs of our customers, providing more accessible specialized trust fund products.

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