Mizuho Financial Group shares plunged nearly 8% after the company clarified it has not yet decided on investing in Rakuten Bank. This statement followed a media report suggesting Mizuho planned to shift its investment from Rakuten Card to Rakuten Bank.
Analysts are watching closely as Rakuten Group’s fintech units undergo reorganization, with potential Mizuho investment being a key factor in managing the financial segments.
Shares of Mizuho Financial Group experienced a significant drop, falling as much as 7.7% on Monday. This decline followed the Japanese lender's clarification that it has not yet made a decision regarding a potential investment in Rakuten Bank. The announcement came after the Yomiuri Shimbun reported on Sunday that Mizuho was planning additional investments in the prominent online bank, citing anonymous sources familiar with the matter.
Image Credit: Kiyoshi Ota | Bloomberg | Getty Images
Mizuho currently holds a 14.99% stake in Rakuten Card Co., which is the credit card and financial services arm of the Japanese e-commerce and internet giant Rakuten Group. The Yomiuri Shimbun report suggested that Mizuho intends to divest its stake in Rakuten Card to instead invest in Rakuten Bank. However, Mizuho stated that while it is exploring various options, including the possibility of investing in Rakuten Bank, no definitive decision has been reached.
Furthermore, the newspaper indicated that Mizuho Securities Co.'s existing 49% stake in Rakuten Securities would remain unaffected by these potential changes.
Analysts are closely monitoring for any future announcements from Mizuho concerning its strategic direction with Rakuten Bank. Jefferies analysts noted in a research brief, "Currently, the [Fintech] segment of Rakuten Group is undergoing reorganization, scheduled to be completed in Oct 2026 whereby the bank, card and securities will be reorganized in the same group." They added that while the worst-case scenario for Rakuten Bank could involve overpaying for its securities and card segments, Mizuho's direct involvement might help mitigate such risks.
This development comes on the heels of Mizuho reporting a substantial 660% surge in its fourth-quarter profit compared to the previous year. The net profit for the quarter ending in March reached 228.7 billion yen ($1.44 billion), a significant increase from 30.1 billion yen a year prior, attributed to robust growth in its fee-based businesses and an elevated central bank policy rate. In the latest trading, Mizuho's shares were trading 7.2% lower, while Rakuten Bank saw an increase of over 8%.
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