Strategy

Mizuho to Cut a Third of Workforce by 2026

The Japanese lender is streamlining amid concern over the prospect of finance technology upstarts "overrunning traditional banking operations."
Matthew HellerNovember 14, 2017

Japanese lender Mizuho Financial Group is planning to cut about a third of its workforce as it seeks to improve profitability amid increasing competition from finance technology upstarts.

Mizuho CEO Yasuhiro Sato said he was “very alarmed by the prospect of new entrants overrunning traditional banking operations like remittances and payments” as the bank announced Monday it will eliminate 19,000 full- and part-time positions by fiscal 2026 to reduce staffing to 60,000.

According to The Financial Times, internal speculation had around 10,000 jobs being cut. Mizuho, which engaged in aggressive hiring after it was formed from multiple bank mergers, will also reduce its branch count by about 100 locations to around 400 by fiscal 2024.

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The streamlining moves recognize that “Mizuho’s current structure in Japan is becoming unsustainable as a declining population and other forces erode its earnings base,” Nikkei Asian Review said. “Over the years, the group hired new graduates and expanded its network nationwide, resulting in high fixed costs that pride and social conscience had prevented it from tackling.”

In addition, the publication said, “Old-line banks face the threat of a dramatically transformed competitive landscape in which they battle for customers against an influx of IT-powered rivals unencumbered by heavy personnel and overhead costs.”

For the July-September period, Mizuho’s net profit fell 12% to 198.4 billion ($1.75 billion). Net business profit — a measure of core earnings at the group’s two banks, Mizuho Bank and Mizuho Trust & Banking — declined 41% in the April-September period to 180.7 billion yen ($1.59 billion).

“Mizuho and other Japanese banks have been hit by diminishing returns from lending under the Bank of Japan’s massive monetary easing, which has pushed down interest rates on mortgages, car loans and corporate borrowings,” Reuters noted.

Mitsubishi UFJ Financial Group, Japan’s biggest financial group, announced in May it would streamline its operations and increase the use of technology. President Nobuyuki Hirano said in September the bank aimed to automate 9,500 clerical jobs in Japan at its main subsidiary Bank of Tokyo-Mitsubishi UFJ, or about 30% of jobs there.