Nomura Holdings Inc, Japan’s largest brokerage, plans to shut down its European equity operations as it cuts costs after years of failing to become profitable overseas, a person with knowledge of the matter said. The shares jumped.
The Tokyo-based securities firm would shutter equity research, sales, trading and underwriting for European stocks, according to the person.
An announcement of the move, along with job reductions in the Americas, could come as early as yesterday, the person said, asking not to be identified discussing private information.
Photo: Reuters
About 1,000 employees in Europe and the Americas could be affected, another person said.
Nomura, which had 3,433 employees in Europe and 2,501 in the Americas as of Dec. 31 last year, has been considering overhauling its overseas businesses since chief executive officer Koji Nagai in February postponed a goal to earn ￥50 billion (US$462 million) of pretax profit abroad.
Nomura might dismiss about 20 percent of its workforce in North America, people with knowledge of the situation said last month.
Kenji Yamashita, Nomura’s Tokyo-based spokesman, declined to comment on the reorganization in Europe.
The Nikkei newspaper reported the potential scale of the job cuts earlier yesterday.
Shares of Nomura surged 7.4 percent at the close of trading in Tokyo, the most in about two months.
That pared this year’s decline to 29 percent.
Global investment banks, including Credit Suisse Group AG, are cutting thousands of jobs as market volatility and low interest rates curb trading. Wall Street firms are poised to post lower revenue from trading and dealmaking for the first quarter of this year.
Nagai, who became chief executive officer in August 2012, has grown more bearish about prospects for the company’s overseas business in recent months.
The firm will cut costs overseas by trimming jobs and shrinking unproductive operations, he said in an interview in February.
Global market turmoil has affected overseas wholesale business and made it difficult to predict when the company could return to profit abroad, he said.
Nomura reported a ￥50.6 billion pretax loss at its European operations for the nine months to Dec. 31 last year.
The brokerage last posted an annual profit outside of Japan in the year ended March 2010. Its ranking for underwriting equity offerings in Europe dropped to 50th this year from 19th for all of last year, according to data compiled by Bloomberg.
The company’s equities business in Europe is part of its global markets division, which also handles fixed-income sales and trading. It also has investment banking and asset-management operations in the region.
The Japanese firm cut about 60 fixed-income and credit-derivative positions in London last year, a person familiar with the situation said at the time.
Nomura has gone through a series of expansions and contractions outside of Japan over the years. It bought bankrupt Lehman Brothers Holdings Inc’s European and Asian operations in 2008, only to pare back operations in the regions later, after costs and losses swelled.
As recently as December last year, Nagai said there was “still potential for growth in the Americas” and that the firm is seeking to double investment-banking revenue there over the next two to three years.
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