Rakuten Bank plans to integrate Rakuten Card and Rakuten Securities Holdings, with meaningful synergy targets but a reduced capital buffer

Overview

This report comments on the fintech business reorganization announced by Rakuten Group and Rakuten Bank after the market close on May 20. Under the plan, Rakuten Bank will make Rakuten Card and Rakuten Securities Holdings subsidiaries; at the same time, Mizuho Financial Group and Rakuten Bank announced a strategic capital and business alliance between Mizuho Bank and Rakuten Bank. After the reorganization, Mizuho Bank will hold a 5.81% equity stake and 10.52% voting rights in Rakuten Bank, while Mizuho Securities will continue to hold a 49% equity stake in Rakuten Securities Holdings.

Core views

The core view is that the reorganization can significantly expand Rakuten Bank's profit base and generate synergies through replacing external interest-bearing debt with intra-group financing, improving intra-group management efficiency of investment assets, and expanding the individual customer base; however, the transaction will also dilute common equity and reduce capital adequacy. Goldman Sachs views underlying factors such as the return of deposit balances to double-digit year-on-year growth in 4Q and solid growth in medium-risk assets positively, but notes that FY3/27 guidance is below its estimates due to factors such as an unchanged 0.75% policy rate assumption and customer acquisition costs.

Analysis framework

The report uses an event-driven company research framework, analyzing the reorganization announcement, company conference call, pro forma profit, synergy targets, capital adequacy changes, shareholding structure changes, and existing fundamentals. As Goldman Sachs rates the stock Not Rated, the report does not provide a target price and does not incorporate the proposed reorganization into its earnings forecasts.

Methodology notes

• Event-driven company researchFintech business reorganization analysis

  Assessing the potential impact of the reorganization on company fundamentals through the transaction structure, synergy breakdown, and capital impact.

  The report compares Rakuten Bank's ordinary profit, pro forma consolidated profit, FY3/30 target, FY3/28 and medium-term synergies, capital adequacy, and share count changes within a single framework to assess the benefits and constraints of the reorganization.

• Disclosure frameworkGS Factor Profile

  Goldman Sachs provides investment context for stocks through growth, financial returns, valuation multiples, and composite percentile rankings.

  As explained in the appendix, for financial stocks this framework mainly references EPS and sales growth for growth, ROE for financial returns, and P/E, P/B, and P/D for valuation multiples; however, this report does not assign a formal rating or target price to Rakuten Bank.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Rakuten Bank Ltd. (5838.T)

  Core target; the company will become the integrated platform for the fintech business after the reorganization.

  Strengths

  Deposit balances have returned to double-digit year-on-year growth, and medium-risk assets are growing steadily; the reorganization is expected to expand the profit base and improve intra-group capital efficiency.

  Weaknesses

  Post-reorganization capital adequacy is expected to decline to around 8%, and the common share count will increase by 28%, potentially creating capital constraints and dilution pressure.

  Comparison

  FY3/26 ordinary profit rises from standalone ¥103.0 bn to a simple pro forma ¥204.0 bn, indicating a significant expansion in scale after integration.

  Risks

  Regulatory approval, synergy realization, pace of capital accumulation, interest rate assumptions, and customer acquisition costs could all affect the investment view.

• Rakuten Card

  Planned to become a Rakuten Bank subsidiary and is an important component of the credit card business in the reorganization.

  Strengths

  Can contribute to customer base expansion synergies and create cross-selling opportunities with banking deposits and lending.

  Weaknesses

  Post-integration it may increase capital consumption and operational complexity.

  Comparison

  Compared with banking, the credit card business relies more on consumer finance and customer reach capabilities.

  Risks

  Credit cycle, customer acquisition costs, regulatory requirements, and integration execution risk.

• Rakuten Securities Holdings

  Planned to become a Rakuten Bank subsidiary, while Mizuho Securities will continue to hold a 49% equity stake.

  Strengths

  The securities business can expand the financial services ecosystem and enhance synergies in customer asset management and trading services.

  Weaknesses

  The minority shareholder structure and volatility of the securities business may reduce integration transparency.

  Comparison

  Compared with banking, securities revenue is more affected by market turnover and asset price fluctuations.

  Risks

  Market volatility, regulatory approval, minority equity arrangements, and business integration risk.

• Mizuho Bank / Mizuho Financial Group

  Strategic capital and business alliance partner; Mizuho Bank will hold part of Rakuten Bank's equity and voting rights.

  Strengths

  Can provide strategic cooperation and capital relationship support for the reorganization.

  Weaknesses

  The equity and voting rights arrangement may increase governance complexity.

  Comparison

  Mizuho is an external large financial group partner, while Rakuten Group will still retain a substantial amount of Class A shares.

  Risks

  Alliance execution, governance coordination, and regulatory approval uncertainty.

Key data

• FY3/26 ordinary profit¥103.0 bnFY3/26 ordinary profit disclosed by Rakuten Bank.
• FY3/26 simple pro forma ordinary profit¥204.0 bnSimple pro forma consolidated basis assuming the reorganization had been completed in that fiscal year.
• FY3/30 ordinary profit targetAbove ¥400 bnPost-reorganization medium-term target disclosed by the company in the announcement.
• FY3/28 synergy targetAbove ¥33.0 bnNearer-term synergy target disclosed by the company.
• Medium-term synergy targetAbove ¥85.0 bnIncludes ¥53.0 bn of financial synergies and ¥32.0 bn from expansion of the individual customer base.
• Capital adequacy changeFrom 10.7% down to around 8%From the pre-reorganization FY3/26 level to the expected post-reorganization level.
• Mizuho Bank post-reorganization stake5.81% equity, 10.52% voting rightsTo be held by Mizuho Bank after converting Class A shares into common shares on the effective date.
• Post-reorganization share countAbout 405 mn sharesAbout 223 mn common shares and about 181 mn Class A shares; common shares increase 28% from 174 mn before the reorganization.
• Planned effective date2026-10-01The transaction still requires approvals and permits from relevant domestic and overseas governments and regulatory authorities.

Impact & implications

If completed successfully, the reorganization will expand Rakuten Bank's business scope from banking into credit cards and securities platforms, helping improve intra-group synergies in financial services, customer cross-selling, and capital efficiency. From an investment perspective, the profit targets and synergy breakdown strengthen the medium-term growth narrative, but the decline in capital adequacy, the increase in common share count, and regulatory approval uncertainty require the market to reassess the balance among growth, capital, and dilution.

Risks

• The reorganization requires approval from relevant domestic and overseas governments and regulatory authorities, and the timing and conditions remain uncertain.
• Capital adequacy is expected to decline from 10.7% to around 8%, which may limit future asset expansion and business growth.
• The synergy targets are ambitious, and achieving more than ¥85.0 bn in medium-term synergies requires both financial synergies and customer expansion to materialize.
• The common share count is expected to increase by 28%, which may create dilution pressure on per-share metrics.
• FY3/27 guidance is below Goldman Sachs estimates, reflecting pressure from factors such as an unchanged 0.75% policy rate assumption and deposit acquisition costs.
• Goldman Sachs rates Rakuten Bank as Not Rated, and there are disclosure items including its role as financial advisor on related strategic matters and investment banking relationships.

What to watch

• Progress on regulatory approvals and permits ahead of the planned effective date of October 1, 2026.
• The actual integration pace after Rakuten Card and Rakuten Securities Holdings are brought in as subsidiaries.
• Delivery against the FY3/28 synergy target of no less than ¥33.0 bn.
• Execution of the medium-term synergies of more than ¥85.0 bn, including ¥53.0 bn of financial synergies and ¥32.0 bn from individual customer expansion.
• Whether retained earnings accumulation can support future growth after capital adequacy declines to around 8%.
• The impact of the post-reorganization total share count of about 405 mn and the 28% increase in common shares on EPS and valuation.