Japanese brokerage Nomura cuts back but keeps global hopes intact

PUBLISHED : Tuesday, 11 September, 2012, 12:00am
UPDATED : Tuesday, 11 September, 2012, 2:20am

Nomura Holdings' Koji Nagai, who took over as chief executive last month, said he plans to make overseas operations at Japan's largest brokerage profitable by June 2014.

"We are not going to lower the flag as a global bank," Nagai, 53, said. "We want to be an Asia-based global investment bank."

The forecast may be a relief to investors, who have seen the stock drop to near a 37-year low as the 2008 purchase of Lehman Brothers' European and Asian units swelled costs that led to nine consecutive quarters of losses abroad.

Nagai aims to arrest the slide by paring US$1 billion in expenses and improving wholesale banking operations. He is considering acquiring an investment bank in Asia to increase revenue in the region.

"Nomura was trying to do too much in too many places and wasn't profitable outside Japan," said David Marshall, an analyst at Creditsights Singapore. "Adopting a more focused strategy should help to improve operational efficiencies."

The company said last week it will reduce costs by US$450 million in Europe and the Middle East, US$210 million in the Americas and US$340 million in Asia including Japan.

About 45 per cent of the cuts worldwide will be from trimming staff, with the rest coming from other operational expenses. Most of the cuts will be in investment banking and equities, it said.

The firm will expand its fixed-income business globally and reassign people from other divisions to the unit, two people with direct knowledge of the matter said last week.