Nomura to cut equities, investment banking in strategic reset

Sun Aug 26, 2012 4:10pm EDT
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By Nathan Layne and Emi Emoto

TOKYO (Reuters) - Nomura Holdings (8604.T: Quote) is finalizing plans to cut hundreds of jobs, mainly in equities and investment banking, in an overhaul aimed at restoring its overseas operations to profitability, people with knowledge of the planning within Japan's largest brokerage said.

The cost-cutting will be part of a new strategic blueprint for Nomura being mapped out by Koji Nagai, who took over as CEO this month and has promised to rebuild the investment bank from the "ground up" after an insider trading scandal that forced the resignation of its top two executives.

While the size and scope of the streamlining are still being debated, one analyst estimated Nomura could target $750 million in annual cost savings, on top of a nearly completed $1.2 billion cost-cutting drive. The plan will be made public early next month, according to people with knowledge of the matter who declined to be identified ahead of an official announcement.

Executives are looking to focus the cuts in cash equities, a business hit hard by the industry-wide slump in trading volumes but one that Nomura, which ranks among the top players in London, has trumpeted as a strength.

Investment banking positions outside a set of sectors identified as strategic are also at the front of the line for cuts, the sources said. Nomura declined to comment.

Europe, which employs around 4,000 people and generated 76 billion yen, or $970 million, in losses over the past year as the region slipped into its ongoing debt crisis, will account for the largest portion of the cuts. But Asia outside Japan and the Americas will be impacted as well.

"If you look at our earnings and the economic environment it's obvious what needs to be done in terms of geography and business lines," a senior executive told Reuters.

Nagai and new Chief Operating Officer Atsushi Yoshikawa are keen to send a signal that they are not out to retreat from Nomura's global ambitions. Nomura acquired the European and Asian operations of stricken Lehman Brothers in 2008 and has built out its operations in the United States on its own.   Continued...

Pedestrians are reflected in a sign displayed outside a Nomura Securities branch in Tokyo June 18, 2012. REUTERS/Issei Kato