 "Nomura plans to shut European equity operations")
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 will 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, may come as early as Tuesday, said the person, asking not to be identified discussing private information. 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 December 31, has been considering overhauling its overseas businesses since Chief Executive Officer Koji Nagai in February postponed a goal to earn 50 billion yen ($462 million) of pretax profit abroad. Nomura may dismiss about 20 per cent 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 reorganisation in Europe. The Nikkei newspaper reported the potential scale of the job cuts earlier Tuesday.
Shares of Nomura surged 7.4 per cent at the close of trading in Tokyo, the most in almost two months. That pared this year's decline to 29 per cent.
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 deal-making for the first quarter of 2016.
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.
Nomura reported a 50.6 billion yen pretax loss at its European operations for the nine months to December 31. 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 2015, 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.
