Nomura plans to dismiss 20% of North America staff

Nomura Holdings Inc. may dismiss about 20 percent of its workforce in North America, according to people with knowledge of the situation, joining a growing number of competitors shrinking Wall Street operations amid a trading slump.

Decisions aren’t final, and the ultimate number could still differ, said the people, who asked not to be identified discussing internal deliberations. One senior manager said reductions could be expanded to affect as much as 30 percent of the region’s staff. Japan’s biggest brokerage has about 2,500 employees in the Americas, most of whom work in the U.S. and Canada.

Jennifer Will, a company spokeswoman in New York, declined to comment.

Firings in the U.S. would signal a reversal for Chief Executive Officer Koji Nagai, who said as recently as December that the Tokyo-based bank has room to add employees in the Americas even after losing money there. Market swings, low interest rates and slumping commodities prices already are spurring rival firms to warn shareholders about another drop in revenue from trading and dealmaking this quarter. The challenges also have been spurring more job cuts at companies including Credit Suisse Group AG, Bank of America Corp.and Goldman Sachs Group Inc.

Shares of Nomura rose 0.3 percent at 9:29 a.m. in Tokyo on Friday. The stock has dropped about 25 percent in 2016, heading for a third year of declines.

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.

In the Americas, Nomura has posted pretax losses for six straight quarters. Nagai, 57, abandoned a goal to earn 50 billion yen ($443 million) in profit abroad for the year ending March after the company lost 63 billion yen overseas before taxes in the first nine months. Nomura last made an annual profit outside of Japan in the year ended March 2010.

Global Banks

Global investment banks are deepening staff reductions as the trading slump and stricter regulations curtail profitability. Credit Suisse announced 2,000 additional job cuts on Wednesday, with CEO Tidjane Thiam saying the Swiss bank may post a net loss this quarter. Goldman Sachs and Bank of America, two of the largest U.S.-based investment banks, have been leaning on annual dismissals of low performers to shrink parts of their Wall Street operations, people familiar with the plans have said.

Nagai, who became CEO 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.

As recently as December, 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.

Lower Profit

Nomura, which has been relying on domestic operations for profit, also faces tougher business conditions at home, where investors are losing enthusiasm for Prime Minister Shinzo Abe’s economic stimulus policies. Net income is expected to fall 19 percent to 183.2 billion yen in the year ending March 31, according to the average estimate of analysts surveyed by Bloomberg.

The Japanese firm employed 2,501 people in the Americas as of Dec. 31, an increase of 56 from a year earlier. It was seeking to hire about 20 investment bankers in the region in 2016 to catch up in the U.S. mergers market, Kentaro Okuda, global head of investment banking, said in an interview published in December.

That same month, Nomura released a presentation saying it will focus on generating fees in the region from companies with a market value of less than $10 billion. The firm was ranked 43rd among advisers on U.S. mergers last year, data compiled by Bloomberg show.

Bloomberg

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.