Hiring plans on hold as Mizuho plots London derivatives merger

Mizuho’s London office

The Japanese financial group’s parent has opted to merge it with an existing market-making business in the UK capital and create a single vanilla derivatives platform in Europe.

In December 2015, Christian Heiberg, the head of fixed income trading at Mizuho International, told FN the company “might be one of the only growth stories” in the market after gaining membership of LCH.Clearnet and becoming self-clearing. The move marked a step forward in parent company Mizuho Financial Group‘s derivatives aspirations in London, and Heiberg said at the time his company was looking to hire derivatives traders.

Speaking to FN a few days after Mizuho Financial announced on August 1 that it will integrate Mizuho Capital Markets UK – a London-based derivatives market-making business that sits within Mizuho Bank – with Mizuho international’s interest-rate swaps desk, Heiberg said that the enlarged division should be in a position to win business at a tough time for the industry.

Heiberg, who joined Mizuho International in June 2015 from Nordea, said: “We’re a flow house, so it’s important to have the critical mass that I think will be the result of bringing together the corporate client base of the bank [from Mizuho Capital Markets UK] together with the institutional client base of Mizuho International.”

The merger will happen in phases between November 2016 and April 2017, Heiberg said. A consultation is underway over whether there will be any job losses involved in the merger, and Heiberg said the hiring plans he outlined in December would be put on hold.

He said Mizuho International “will get a number of traders and a number of sales people from MCM UK to work with us” but that there will not be external hires, adding: “I think from the trading side there will be sufficient staff to meet the client demands, at least with the business we’ve received now. What the future brings, we’ll have to see – but I don’t expect to hire more derivatives traders in the short to medium term.”

Heiberg described the market environment as “challenging” for all firms. “The next couple of years will be more of the same when we focus on reducing risk-weighted assets and then hopefully being more efficient in a few years’ time.”

However, he added that Mizuho International, as a new player in the derivatives space, had some things working on its favour. Mizuho International has no legacy portfolio to finance, he noted, while its systems are easier to overhaul when needed than those at other banks: “We don’t have a legacy portfolio in terms of IT – and this is very much an IT game. Whenever we want to make amendments to our systems, it’s much easier for us with our IT platform to make the amendments than it is for larger institutions with a huge platform where everything has to cooperate with a bigger system.”

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