Simon Walker, head of loan markets and syndicate at Mizuho Americas, has left the bank barely a year after he joined, amid high-level disagreements over its strategy in leveraged finance, according to two people familiar with the situation.
Mizuho, which reported a 4.4% decline in profit for fiscal year 2017, has flagged the non-investment grade market as a priority for growth. But the departure of Walker, who was hired as part of that push, reflects a mismatch between the bank’s bullish rhetoric and its more conservative appetite for risk, the people said.
In an interview with Bloomberg in August, CEO Tatsufumi Sakai said the bank had been too conservative in its lending, and that it was becoming more aggressive in pursuing riskier clients overseas to stem the decline in its earnings.
“The non-investment-grade market has a large fee pool and we still have plenty of room for penetration,” Sakai said at the time. Mizuho will focus on counterparties in a handful of sectors including healthcare, retail and telecom, and will hedge its exposures using CDS, he added.
Walker spent 10 years at UBS before joining Mizuho in the summer of 2017, a record year for leveraged loan issuance. He had ambitious plans to lead more leveraged finance deals from start to finish, according to an interview with Reuters around the time of his hire.
But despite Sakai’s bullish view on the non-investment grade market, Mizuho has proven less aggressive in building out its platform than some of its bankers had hoped, the people said.
In a statement to Debtwire, Jerry Rizzieri, president and CEO of Mizuho Securities USA, said the bank remained “strongly committed” to the leveraged finance sector.
Indeed, new hires in Mizuho’s US investment banking division over recent months include a loan syndicate banker in New York, three new financial sponsor bankers, three senior coverage bankers and a handful of new faces in high yield sales and trading.
However, many of these recent hires are either relatively junior or less focused on leveraged finance. Mizuho has also lost other senior bankers in the leveraged finance space recently, including Brian Carr, a managing director in financial sponsor coverage, who moved to Guggenheim earlier this month.
Following Carr’s departure, Mizuho announced that Jeffrey Tuckel, a managing director, had joined the bank’s West Coast sponsor coverage team from Wells Fargo. Two Wells Fargo colleagues joined with him—Robert Minikes, a director, and Joseph Flores, a vice president.
In New York, John Stroll—who worked with Walker at UBS—joined Mizuho’s leveraged loan syndicate earlier this year as an executive director. Meanwhile, the three managing directors who joined the coverage team focus on a broader set of priorities than just leveraged finance.
Mizuho places 25th in Debtwire’s league table for bookrunners of leveraged loans so far this year, up one place from the same period in 2017. That puts it above Sumitomo Mitsui Financial Group, but below Mitsubishi UFJ and Nomura.
In Debtwire’s league table for high yield bond bookrunners, it is in 14th place, also up one from last year, putting it below Mitsubishi but above Sumitomo and Nomura.
In his statement, Rizzieri pointed to Mizuho’s involvement in recent transactions including KKR’s buyouts of Envision Healthcare and BMC Software, as well as the loan financing for Ball Metalpack, a joint venture between Ball Corp and Platinum Equity.
Walker declined to comment.
by Will Caiger-Smith