Oct. 15 (Bloomberg) -- Nomura Holdings Inc., Mitsubishi UFJ Financial Group Inc. and their biggest rivals plan to cut hiring of university graduates in Japan by almost half, just as the industry begins emerging from its deepest slump in seven decades.

Nomura, Daiwa Securities Group Inc., Nikko Cordial Securities Inc., Mitsubishi UFJ, Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. will hire a combined 4,190 graduates on April 1, down from 8,026 a year earlier, according to data from the companies.

The firms risk leaving themselves short of staff as trading and stock sales recover from last year’s bust and competition stiffens in the securities market, said Katsunobu Komizo, head of Executive Search Partners Co. in Tokyo. A similar misstep in the 1990s left them unprepared when the benchmark Topix index embarked on a four-year winning streak in 2003, he said.

“Japanese banks make hiring decisions to simply reflect their current earnings -- they are lacking in personnel policies,” said Komizo, a former banker at Sumitomo Mitsui. “They should have learnt their lesson after struggling with staff shortages around 2003, and should have made a long-term investment in their personnel.”

The six companies, buffeted by the global financial crisis, posted a combined loss of $23 billion last fiscal year. Banks seeking to bolster their securities businesses have driven $15.5 billion of mergers and acquisitions in Japan’s financial industry this year, the most since 2005, according to data compiled by Bloomberg.

‘Opaque Environment’

Japanese companies typically add a new class of graduates at the start of every fiscal year that begins April 1. About 433,000 graduates joined the workforce this year, according to Ministry of Health, Labor and Welfare estimates.

Nomura, the country’s biggest brokerage, plans to hire 500 graduates, compared with 650 a year earlier, while smaller rival Daiwa will add 360, down from 833, spokespeople for the Tokyo- based firms said in interviews.

The banking unit of Mitsubishi UFJ, Japan’s largest lender by market value, will take in 650 graduates next year, down from 1,500, the company said. At the brokerage division, hiring will slump two-thirds to 137. Sumitomo Mitsui’s bank unit plans to cut hiring by more than half to 993.

Mizuho, which hired 2,350 graduates this year, will reduce that number to 1,370, the fewest since 2005. The bank lost 588.8 billion yen ($6.6 billion) last fiscal year as writedowns swelled.

“We’re holding back hiring to some degree because of the opaque business environment,” Mizuho spokeswoman Masako Shiono said in an interview.

Career Paths

Mizuho and Mitsubishi UFJ’s banking unit were the most popular corporate destinations this year for graduates of Keio University, Japan’s oldest college and a training ground for politicians and business leaders. Each bank hired 108 graduates from the Tokyo-based university, ranking them ahead of Canon Inc., Sony Corp. and Toyota Motor Corp.

“The financial industry is still popular and students’ first choice,” Shinji Sasaki, chief of placement and career services at Keio, said in an interview yesterday. “They understand how difficult it is to get an offer from banks and brokerages.”

Students are attracted to finance because of the higher pay, international career paths and the chance to come into contact with various parts of the economy, Sasaki said.

He added that Keio expects to fill an 800-seat auditorium on Oct. 16 and Oct. 19, when alumni from Sumitomo Mitsui, Mitsubishi UFJ and insurers return to the university for panel discussions with students.

Overseas Push

The companies are slowing hiring at home even as they try to expand abroad, reflecting Japan’s waning significance in the global economy.

“This illustrates Japanese banks’ perceptions of the domestic economy versus abroad, and the nation’s falling population and the financial crisis,” said Susumu Kato, managing director and chief economist at Calyon Securities in Tokyo. “It’s actually surprising that banks are hiring people in numbers as high as they are.”

Nomura, the firm that bought bankrupt Lehman Brothers Holdings Inc.’s operations in Europe and Asia last year, this month is raising about $5 billion in a share sale to bankroll a push into the U.S. that may include mass hiring. The brokerage aims to double its U.S. staff to more than 1,200, the Nikkei newspaper reported Oct. 5, without citing anyone.

Mitsubishi UFJ last year paid about $3.6 billion to take full control of San Francisco-based lender UnionBanCal Corp. and is merging its securities unit in Japan with Morgan Stanley.

To contact the reporter on this story: Takahiko Hyuga in Tokyo at thyuga@bloomberg.net

Last Updated: October 14, 2009 23:52 EDT