Tokyo: Nomura Holdings Inc plans to derive almost half of its $1 billion (Dh3.67 billion) in planned savings from Europe, where it will cut jobs for managing directors and back-office staff, two people with direct knowledge of the matter said.
Japan’s biggest brokerage will pare about $450 million of costs in Europe and the Middle East, $200 million in the Americas and $350 million in Asia including Japan, the people said, asking to not to be named before an announcement today. Chief Executive Officer Koji Nagai will present the numbers to investors at 3:30pm in Tokyo, they said.
About half of the cost cuts worldwide will be from trimming payrolls, with the rest coming from merging some operations, curtailing rental expenses and reducing investment in information technology, the people said. Tokyo-based Nomura will expand its fixed-income business globally and reassign people from other divisions to join the unit, the people said.
“There was a consensus that the cuts would centre 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, an analyst at Credit Suisse Group AG in Tokyo. “Curtailing the job cuts and reducing operational costs instead eases concern about revenue dropping.”
Europe accounted for about 20 per cent of Nomura’s total costs for the year ended March 31, while the US represented another 12 per cent, the firm’s financial statements show. Excluding Japan, Asia accounted for 3.3 per cent.
Shares of Nomura rose 2.7 per cent to 267 yen at 1:57pm in Tokyo, while the benchmark Topix index lost about 0.1 per cent. The stock, which touched a 37-year low in November, has gained about 15 per cent this year, compared with a 2.5 per cent advance in the Nikkei 225 Stock Average.
The changes mark a retreat in the bank’s four-year struggle to build a presence in the region, beginning with the 2008 purchase of Lehman Brothers Holdings Inc’s European arm. Nagai, 53, who took over as CEO from Kenichi Watanabe last month following an insider-trading scandal, is scaling back after the bank’s foreign operations reported nine consecutive quarterly losses.
Keiko Sugai, a spokeswoman for Nomura in Tokyo, declined to comment on the plans.
Nomura will begin eliminating jobs in Europe this month as it pares ambitions to be a full-service, global investment bank and takes a narrower focus on four or five industries in the region, three people with knowledge of the situation said earlier. The reductions in the region will fall most heavily in equity sales and trading and in investment banking, the people said. No final decisions on job cuts have been made, they said.
The European investment-banking division, which advises companies on mergers and underwrites share and bond issues, will be shrunk to focus on financial services, natural resources, industrial companies and private equity, two of the people said.
Nomura will refocus on domestic markets and reduce spending overseas by around $1 billion by March 2014, Nagai said on August 31. That follows $1.2 billion in cost cuts last year.
The company generated 14 per cent of revenue from Europe last quarter, 11 per cent from the Americas and 2 per cent from Asia excluding Japan, according to data compiled by Bloomberg. The remaining 73 per cent came from Japan.
Nomura posted a 12.1 billion yen pretax loss from businesses abroad in the three months ended June. Europe lost 16.4 billion yen, Asia lost 1.9 billion yen and the Americas generated a pretax profit of 6.3 billion yen.