Nomura Said to See Up to $700 Million Annual Savings on Cuts

  • CEO Nagai is restructuring Europe equities unit, cutting jobs
  • Securites firms are cutting costs to weather trading slump

Nomura Holdings Inc. expects about $600 million to $700 million of annual cost savings from restructuring its European equities business and cutting jobs there and in the Americas, according to people with knowledge of the matter.

Japan’s largest securities firm will report details on its savings plan when it releases earnings on Wednesday, said the people, who asked not to be identified discussing private information. Top executives expect the cost cuts to enable Nomura to post a profit from its overseas operations for the current fiscal year, something it last achieved in 2010, the people said.

Chief Executive Officer Koji Nagai is seeking to stem persistent losses overseas by largely closing down the European equities business and cutting jobs in the Americas, according to people with knowledge of the moves. Nomura may post its first quarterly loss in more than four years, the Nikkei newspaper reported Wednesday, without saying where it got the information.

The firm is scheduled to report fourth-quarter earnings at 3 p.m. local time. Nomura may have lost as much as 10 billion yen in the three months ended March, the Nikkei said. Analysts expect it to post profit of 23.4 billion yen, according to the average of 10 estimates compiled by Bloomberg. Kenji Yamashita, a Tokyo-based spokesman for Nomura, declined to comment.

Shares Fall

Shares of Nomura fell 2.2 percent at the start of trading in Tokyo Wednesday, extending this year’s decline to 23 percent. The Topix index slipped 0.2 percent and is down 10 percent in 2016.

Global securities firms are having to rely on cost reductions to shore up earnings amid a plunge in trading revenue. Goldman Sachs Group Inc. and Morgan Stanley are among Wall Street banks that moved to counter declining revenue with cost reductions in the first quarter. Others such as Barclays Plc have been forced to exit certain businesses altogether as their CEOs focus on preserving capital.

Nomura’s restructuring of its European equities could affect as many as 1,000 jobs, people with knowledge of the matter said this month. The company posted a 63 billion yen pretax loss overseas for the nine months ended Dec. 31. 

The securities firm is also eliminating about 25 investment-banking positions in Europe and another 20 in the U.S., people familiar with the matter have said. That’s on top of 12 job losses at the division in Asia last month. Nomura will also scale back leveraged financing for buyout deals in the U.S., shrinking a potentially lucrative business that can also weigh on earnings in volatile markets, the people said.

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