Mizuho Financial Group ADRs Begin Trading on NYSE Today

Last week Mizuho Financial Group (MFG) announced it received approval to list ADRs on the New York Stock Exchange (NYX) and will begin trading today with Mizuho's CEO ringing the NYSE bell. Larger rival Mitsubishi UFJ Financial Group (MTU) also trades on the NYSE, as does Nomura Holdings (NMR), Japanese largest brokerage.

In a press release, Mizuho said its ADR program is part of its corporate management strategy to enhance transparency in corporate governance, raise investor's trust, and also to "enhance investor convenience in the U.S. capital markets with respect to investments in our common stock." It's also understood that its ADRs are seen as a way to boost its awareness, hopefully leading to more customers and investment banking business.

Mizuho's ADRs will be Level 2 - sponsored (CUSIP: 60687Y109), with 500 ADRs equaling 1 ordinary share. Mizuho mentions, "Under a Level 2 program, ADRs may be issued and listed on U.S. stock exchanges without being accompanied by the issuance or sale of new stock, and the issuer of the underlying stock is required to disclose information in a similar manner as U.S. listed companies." The depository bank will be the Bank of New York (BK).

An article by Bloomberg/IHT, said Mizuho was approved to list as many 300 million ADRs, which is 5% of its outstanding stock. The article's authors call Mizuho's ADR listing symbolic given the prolonged struggle to reform and handle non-performing loans in the Japanese banking sector, and at last this year, repay public money it received in a bailout. Masayuki Yasuoka, co- president of TPG Newbridge in Japan and former Mizuho investment banking head of investment is quoted saying:

"It's proof it [Mizuho] has turned to offense from defense, and it's a symbolic global move as Japanese companies reach overseas."

Naoko Nemoto, managing director at S&P in Tokyo, comments:

"Passing the exchange's strict criteria means it has a sound balance sheet, profitability and compliance. It may raise the bank's credit rating in the long term, which will be important in taking on overseas rivals. Mizuho can't wrestle in the same sumo ring unless its gets the same credit rating."

A banking analyst at Nomura said, "The listing is the next step for Mizuho to provide a full-range of investment banking services in the U.S. Mizuho offers loans but it couldn't provide equity underwriting for U.S. companies."

Links: Mizuho Investor Relations, Mizuho Form 20-F (filed with SEC), Bank of New York ADRs, ADR.com

Mizuho's ordinary shares (Tokyo: 8411) dropped 2.68% today to close at ¥870,000 ($14.75 ADR equivalent at ¥117.95/US$1). Domestic-demand stocks including the banking sector were under pressure due to weak preliminary economic leading indicators and economists saying they expect no growth in Q3 GDP, likely meaning the Bank of Japan will not raise rates again this year. A rate hike is actually viewed as favorable for Japanese banks since their rate spread would improve. Japanese investors were also said to be watching the U.S. mid-term elections for investment implications.

Mizuho Financial Group (Tokyo: 8411) 1-year chart:

Mizuho Financial Group (Tokyo: 8411) 3-year chart:

Disclosure: The author has a long position in Nomura Holdings, but does not own shares of Mitsubishi UFJ, Bank of New York, or the New York Stock Exchange. The author does not plan to take any position in Mizuho at this time.

Comments

[Steven Towns:]

Not much action on Mizuho with volume reported at 71,700 as of about 2:30pm. It opened at $14.90, traded as high as $15.35, and currently is quoted at $14.90. The intra-day low is $14.80. Based on exchange rate fluctuation, it looks like the ADRs are trading at about 0.5% premium, likely a result of a small rally expected tonight, when the market opens in Japan.

2006 Nov 08 02:28 PM