Nomura to Scale Down Global Presence

Europe to feel brunt of cuts as brokerage seeks to save $1 billion

The Japanese brokerage firm Nomura Holdings plans to seek nearly half of a planned $1 billion in savings from cutting European and Middle Eastern operations, with the rest to come from the Americas and Asia.

Bloomberg reported Thursday that Nomura, after losing money for nine consecutive quarters in its four-year effort to go global, will be slashing jobs and operational expenses across the world. Europe will be the focus of the most cuts, since that is where the brokerage tallied its largest losses.

The firm had bought Lehman Brothers Holdings' European and Asian units in 2008 and was determined to present a broader global presence, but with the takeover of the CEO slot by Koji Nagai from Kenichi Watanabe after an insider trading scandal in August, the plan is now to scale back.

In a presentation to investors, the firm said it planned to cut costs by $450 million in Europe and the Middle East, by $340 million in Asia, including Japan, and by $210 million in the Americas. Job cuts will account for some 45% of the $1 billion total, and operational expenses will make up the difference.

Chief Operating Officer Atsushi Yoshikawa told investors that the firm will turn its attention to improving the profitability of wholesale banking, with fixed income figuring prominently. Also planned is a concentration of investment banking operations on the sectors of energy, financial institutions, funds, natural resources and retail. Joint ventures will be considered, he added, as a means of growing cross-border operations.

Cuts in the number of positions for managing directors and back-office personnel will take place in Europe, according to unidentified sources cited in the report. Staff from other divisions will be transferred to its fixed-income business, which is to be the focus of expansion around the world.

“There was a consensus that the cuts would center on Europe, but they’re smaller than we expected. It’s good to see the plans for substantial reductions in Asia as the region has been generating losses,” said Takehito Yamanaka in the report. Yamanaka, an analyst at Credit Suisse Group in Tokyo, was quoted saying, “Curtailing the job cuts and reducing operational costs instead eases concern about revenue dropping.”

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