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Mizuho leads Japan charge to China

By Alex Frew McMillan

The Japanese banks are following overseas competitors such as HSBC and Citibank into China

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HONG KONG, China (CNN) -- Mizuho Holdings is leading the push as Japanese banks forge into China.

Mizuho Bank and Mizuho Corporate Bank, both subsidiaries of the largest bank group in the world by assets, are preparing loan facilities of 200 billion yen ($1.67 billion) and boosting their staffs to handle business related to China, the Nihon Keizai Shimbun stated Friday.

Mizuho wants to tap small- to mid-size Japanese companies looking to set up operations in China, the Nikkei said, citing unnamed company sources.

Sumitomo Mitsui Banking Corp. has already set up management specifically to run China-related business. Last year, it created a division to help Japanese companies looking to establish businesses in China and to track the Chinese economy.

The rest of the Big Four, the Bank of Tokyo Mitsubishi and UFJ Holdings, have also linked with China's Big Four banks to allow settlement in China.

Following Citibank, HSBC

The initiatives come as overseas banks look to set up partnerships with Chinese institutions, keen to tap the estimated $1 trillion in savings China's 1.3 billion people have put in the bank.

Citibank confirmed this week that it is paying $72 million for a five percent stake in Shanghai Pudong Development Bank. (Full story)

HSBC and the U.S. buyout fund Newbridge Capital Group have already lined up deals to buy stakes in Chinese partners.

HSBC, its subsidiary Hang Seng and the Hong Kong-based Bank of East Asia also became the first banks to offer online banking in China when they all began that service this week. (Full story)

Japanese brokerage Daiwa Securities is reportedly looking to set up a joint venture in China, which would make it the first Japanese brokerage to operate in the country. (Full story)

Mizuho pushing restructuring in Japan

Mizuho is generally decreasing the amount of business it does overseas, faced with pressure to shore up its balance sheet and tackle bad loans.

But it is increasing its business in China because many Japanese companies are shifting operations there.

"There is already an inseparable link between Japan's corporate activity and the Chinese economy," an executive told the Nikkei.

Mizuho intends to use the loans not only to help its customers expand in China but also to help them reorganize in Japan, which will be a contingency of getting the funding.

Japan's stock market is closed until Monday for the extended New Year's break. But Mizuho shares, now at 111,000 yen, slumped to a record low of 95,200 yen in November and gave up 58 percent of their value last year.

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