Japan's Banking Giants and the Global Asset Management Grab: Strategic Opportunities and Risks in the Private Credit and Infrastructure Markets

In 2025, Japan's two largest financial institutions—Mizuho and MUFG—are embarking on an ambitious global expansion into private credit and infrastructure markets. This move is not just a strategic pivot but a survival imperative. Domestic growth in Japan has stagnated for decades, compounded by an aging population and a shrinking workforce. The banks are now betting on overseas markets to unlock new revenue streams, particularly in fee-based asset management. Yet, the path is fraught with regulatory complexity, geopolitical tensions, and fierce competition from global giants like BlackRock and Blackstone.

The Drivers of Expansion

Mizuho and MUFG's push into private credit and infrastructure is driven by two key factors: market saturation at home and the explosive growth of private credit. Japan's domestic banking sector has long been constrained by low interest rates and a risk-averse culture. Meanwhile, global private credit—a sector that includes direct lending, mezzanine financing, and distressed debt—has surged from $1.5 trillion in 2023 to an estimated $2.6 trillion by 2029. This growth is fueled by regulatory pressures on traditional banks, which have made lending more costly and less attractive.

Infrastructure, meanwhile, remains a perennial gap in global capital markets. Governments and private entities are scrambling to fund projects in energy transition, transportation, and digital infrastructure. For Mizuho and MUFG, these markets represent a dual opportunity: to diversify their income away from volatile lending and into recurring fee-based models, and to position themselves as global players in a sector where Japan has historically lagged.

Strategic Moves and Partnerships

Mizuho is targeting European and U.S. private asset managers to bolster its credit and infrastructure capabilities. The bank is exploring partnerships with firms that have deep expertise in non-bank financial intermediation (NBFI), a sector that now holds nearly half of global financial assets. This aligns with its recognition that private credit is no longer a niche market but a core component of institutional portfolios.

MUFG, on the other hand, is doubling down on U.S. and European asset management. Its subsidiary, MUFG Asset Management, has increased its London workforce by 50% in two years, signaling a long-term commitment to the region. The bank is also considering a distribution partnership with Morgan Stanley, in which it already holds a 23.6% stake. This would allow MUFG to leverage Morgan Stanley's U.S. client base while avoiding the high costs of organic expansion.

However, both banks face a critical challenge: only 20% of their combined $1.3 trillion in assets under management (AUM) is international. To close this gap, they must execute acquisitions or partnerships that scale their global presence quickly. The risk, of course, is that past Japanese bank expansions—such as the failed U.S. mortgage-backed securities bets in the 2000s—highlight the perils of overreaching in unfamiliar markets.

Navigating a Fragmented Regulatory Landscape

The regulatory environment in the U.S. and EU is a double-edged sword. On one hand, it creates opportunities for Japanese banks to enter markets with less competition from domestic peers. On the other, it introduces complex compliance costs and geopolitical risks.

In the U.S., regulators are intensifying scrutiny of third-party IT dependencies and non-bank financial institutions (NBFIs). The 2024 CrowdStrike outage, which disrupted global financial systems, has led to stricter oversight of technology providers. For Mizuho and MUFG, this means not only securing robust IT infrastructure but also demonstrating resilience to cyber threats—a costly but necessary investment.

The EU's regulatory focus is equally daunting. The European Central Bank (ECB) has warned of liquidity and leverage risks in the NBFI sector, which is central to private credit. Additionally, U.S.-China trade tensions have spilled into financial markets, with tariffs and sanctions creating volatility in cross-border investments. Japanese banks must navigate these tensions while adhering to the EU's stringent Consumer Duty framework, which emphasizes financial inclusion and customer protection.

Risks and the Road Ahead

The risks of expansion are manifold. First, regulatory arbitrage is becoming harder as jurisdictions diverge in their implementation of Basel 3.1 reforms. For example, the U.S. and EU are adopting different timelines for capital and liquidity requirements, forcing Japanese banks to maintain multiple compliance frameworks. Second, geopolitical tensions—particularly in the U.S.-China rivalry—could disrupt supply chains and infrastructure projects, especially in sectors like semiconductors and energy.

Third, competition from global players is fierce. BlackRock's $12 billion acquisition of HPS Investment Partners in 2024 underscores the scale of capital available in private credit. For Mizuho and MUFG to compete, they must offer unique value propositions, such as access to Japan's $10 trillion wealth management market or expertise in infrastructure financing for emerging economies.

Investment Implications

For investors, the expansion of Mizuho and MUFG presents a high-conviction opportunity in the global asset management sector. The banks' focus on private credit and infrastructure aligns with long-term trends in capital markets, particularly as traditional lending becomes less viable. However, success hinges on their ability to execute partnerships effectively and navigate regulatory hurdles.

A key metric to watch is the growth of private credit funds managed by these banks. If Mizuho and MUFG can scale their AUM in this sector to $100 billion or more by 2030, it would significantly diversify their revenue streams and reduce reliance on domestic markets. Investors should also monitor their compliance costs and geopolitical exposure, particularly in the U.S. and EU.

Conclusion

Mizuho and MUFG's overseas expansion is a bold bet on the future of global finance. While the risks are substantial—ranging from regulatory complexity to geopolitical volatility—the potential rewards are equally significant. For investors, the key is to assess whether these banks can adapt their traditional Japanese banking models to the demands of a rapidly evolving global market. If they succeed, they could emerge as major players in the private credit and infrastructure boom. If they fail, the lessons will serve as a cautionary tale for any institution attempting to scale in today's fragmented financial landscape.