TOKYO: Japan’s biggest banks are breaking tradition by promoting foreigners to top management roles to retain and lure overseas talent as growth abroad buoys profit.

Among recent appointments: In July, Debra Hazelton became the first foreign general manager at Mizuho Financial Group’s Tokyo headquarters, where she leads a new department to manage global staff. Sumitomo Mitsui Financial Group’s lending arm promoted two foreigners to executive officer in April, and Mitsubishi UFJ Financial Group’s banking unit appointed its first non-Japanese executive officer last year.

The so-called megabanks are giving foreign staff more responsibility as they expand overseas operations and hiring to spur earnings that are hampered by low interest rates and tepid loan demand at home. The three lenders now get about a third of their profit from abroad, where they increased loans and spent at least $14 billion on acquisitions over the past five years.

“Japanese megabanks will only get more dependent on overseas businesses,” said Yoshinobu Yamada, an analyst at Deutsche Bank in Tokyo. “They’re opening their doors for people hired overseas to get promoted anywhere in the organisation.”

The practice of handing senior management roles to Japanese gave foreigners the impression of a “glass ceiling,” according to John Mullally, an associate director at recruiter Robert Walters in Hong Kong.

“The Japanese megabanks are putting more non-Japanese staff in leadership positions” to attract foreign talent, Mullally said.

Hazelton joined Mizuho’s banking unit in Sydney in 2007 to become the lender’s first non-Japanese country head, following 20 years at Commonwealth Bank of Australia. Her move to Tokyo as the only foreigner among 30 general managers at the head office represents a reversal of a practice of dispatching Japanese nationals to manage operations abroad, she said.

“My specific appointment was kind of a symbol that we’re really looking at input from staff that have been hired outside Japan,” Hazelton said in an interview in July.

While Mizuho doesn’t keep count of staff by nationality, it had 7,745 employees outside Japan as of March, up from 6,745 two years ago, according to the company. They’re mostly non-Japanese and make up 14 per cent of total staff. Overseas headcount is likely to keep rising, though the bank doesn’t have a specific hiring target, according to Masako Shiono, a spokeswoman for the country’s third-biggest lender by market value. Mizuho is adding people in various areas related to corporate finance, Shiono said.

“More and more of our revenue is coming from customers outside Japan,” requiring closer collaboration between staff at home and abroad, Hazelton said. “By giving the outside-Japan staff the opportunity to develop and grow their career within Mizuho, we’re hoping to retain them.”

By arrangement with Washington Post-Bloomberg News Service

Published in Dawn, August 31th, 2014