Kyoto Bank says cuts about the part of the part, merger options on table

(Bloomberg) -Nobuhiro Doi has for years called on Japanese banks to end the long-standing practice of holding shares in their corporate clients. Now the 68-year-old president of Kyoto Financial Group Inc. to the idea comes. “We can no longer ignore demanding views on strategic interests,” Doi said in an interview in the bank’s headquarters in the ancient capital. He also becomes more open to mergers, although he now has no plans. With about 1 billion dollars ($ 7 billion) on cross -bodies, Kyoto Financial was a symbol of Japan’s old guard who was sold against the sale of the game, given its historic ties to exporters in the city, including Nintendo Co., Nidec Corp. and Kyocera Corp., while Doi still wants to keep investments in the technological rains. “We will investigate the justification to hold the shares with more difficult standards,” he said, referring to both businesses in Kyoto and elsewhere. “Some have lost the meaning for us to keep.” The financial institutions of Japan have faced the growing pressure of authorities and investors to bring about their cross -section, which is seen as an impediment to good corporate governance. In November, Kyoto Financial unveiled a target to cut at least 100 billion such interests by March 2029, a goal that Doi does not recognize everyone. ‘It could be better if we could give numbers like $ 200 billion or $ 300 billion. But we actually wanted to hold shares, ‘he said. Kyoto Financial has long argued that keeping interests such as Nintendo is preferable because it delivers healthy returns for the bank. Although the value of its cross -subjects may have dropped in the recent market route, the ¥ 1 trillion he held from September exceeded the current market cap of $ 610 billion. Doi carried most of investors’ demands for brave actions. At last year’s annual shareholders’ meeting, the US Institutional Advisory Firm Institutional Shareholders Services recommended to vote against him because of the bank’s solid interest in customer shares. His approval rating was 75%, but other management members were elected with much higher votes. Other shareholders have taken a more nuanced stance. Kyoto Financial attracted attention when Silchester International Investors asked special dividends in 2022 and 2023. At the time, Silchester said that the bank should only sell its cross if it uses all the returns to repurchase shares, and note the substantial loss of dividend income and capital gains tax from any sale. Both suggestions were voted. Silchester recently raised his stake in Kyoto Financial to 8.5%, showing a regulatory filing. Doi refused to expand on specific communication with silchester. “Some of their views are incompatible with us, but we learned different things from them, including about the returns of shareholders,” he said. He said some overseas institutional investors urged the bank not to sell such shares at all. Bank M&A DOI’s thinking also develops on another controversial topic in the local banking industry in Japan: Consolidation. He will now not exclude the possibility of merging with other local banks – a prospect he considered unthinkable. Behind his changing attitude is the rapidly outdated population of Japan, which means that the number of clients in Kyoto as well as neighboring areas will shrink. “There are different ways to survive and I think a merger is one of the options,” Doi said, while emphasizing that the bank does not have such intentions at the moment. Meanwhile, doi said the bank is likely to reduce its 2.4 billion market portfolio in the financial year that started this month. The total is likely to drop to about 2 billion drops to March 2029, mainly by not reinvesting in the Japanese government bonds when they come to salvation. The current tariff policy of the Trump administration caused by the Trump administration’s tariff policy is one of the reasons to be careful with new bets, Doi said. But a more structural factor is that the bank sees that loans grow faster than deposits, he said. Kyoto and other Japanese banks had a loan loan for years while depositing money, which they asked to drive surplus cash by investing it in their market portfolios. But that changes as the gap between deposits and loans narrows. These dynamics emerged as the economy of Japan recovered from decades of deflation, although it faces fresh uncertainty arising from the US trade policies. “Give us low-to-deposit ratio, we had a major security portfolio earlier,” Doi said. “Now we correct that.” More stories like these are available on Bloomberg.com © 2025 Bloomberg LP first published: 16 Apr 2025, 03:52 am Ist