Mizuho to Shrink New York, London Offices on Remote Work Success

Mizuho Financial Group Inc. plans to trim office space in New York and London in anticipation that some staff will keep working from home even when the coronavirus pandemic is over.

Employees in those financial centers won’t all need to come to the office every day in future, according to Hiroshi Nagamine, a senior executive at Japan’s third-largest bank. “We will reduce the space,” he said in an interview, adding that specific plans are yet to be ironed out.

Nagamine said productivity hasn’t suffered while employees have been working remotely — a view not shared by the chiefs of global financial titans fromJPMorgan Chase & Co. andBlackRock Inc. toUBS Group AG, who have argued that it can be detrimental over time.

Financial firms around the world are grappling with what post-pandemic working life will be like, with some companies such asNomura Holdings Inc. andFifth Third Bancorp seeing opportunities to cut costly real estate by keeping a portion of staff at home.

Nagamine sees a scenario where offices are configured without personally assigned desks, allowing for less space. “So workplaces, not only ours but others as well, will resemble something closer to a free-address office,” he said.

Mizuho has postponed plans to return workers to buildings in New York’s midtown Manhattan district and the City of London, amid lingering concerns over Covid-19. Prime Minister Boris Johnson this weekurged U.K. residents to work from home as his government tightened restrictions to combat a surge in virus cases.

Return Postponed

In London, where Mizuho has about 1,500 employees, it recently told them that only those performing “business-critical” roles can return to its office near St. Paul’s Cathedral, Bloombergreported earlier this month. The bank had previously given staff the choice to return to Mizuho House, 30 Old Bailey as long as the building’s capacity didn’t exceed 50%.

Read about Goldman Sachs’s reversal of return to London office

“The number of infections is rising again in the U.K., France and Spain, so we’re a bit worried about our operations in Europe,” said Nagamine, who is head of Mizuho’s overseas business.

In the U.S., where 90% of its 2,300 employees work remotely, Mizuho was seeking to start calling some bankers back after Labor Day, “but there is anxiety among our staff and things are working well enough now without returning to the office,” Nagamine said.

Mizuho has taken a different approach in Japan, where a relatively low number of infections has allowed it to keep most bankers in the office. Only about 20% of employees at the bank’s Tokyo headquarters are currently working from home.

Nagamine said he hasn’t seen any tangible impact of remote work on output, citing strong results from its U.S. bond underwriting business last quarter as an example. Mizuho made dozens of emergency loans that many borrowers have since switched to bonds.

The bank plans to allocate more resources for non-investment grade issuers in the U.S., Nagamine said. He said it’s also open to opportunities for deals like the one it did with Royal Bank of Scotland Group Plc in 2015, when Mizuhoacquired the U.K. lender’s North American loan and credit line portfolio worth $36.5 billion.

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