Nomura Said to Prepare North America Job Cuts Amid Trading Slump

  • Japanese firm has been expanding in U.S. to boost fee business
  • Global banks are slashing costs as trading revenue slumps

Nomura Holdings Inc. plans to cut jobs in North America, people with knowledge of the matter said, following competitors from Credit Suisse Group AG to Deutsche Bank AG in trimming operations amid a trading slump.

The people, who asked not to be identified discussing confidential information, didn’t say which divisions would be affected. Kenji Yamashita, a spokesman for Tokyo-based Nomura, declined to comment. Japan’s biggest brokerage has about 2,500 employees in the Americas, most of whom work in the U.S. and Canada.

Cutting jobs in the U.S. would signal a reversal for Chief Executive Officer Koji Nagai, who said as recently as December that the firm has room to boost hiring in the Americas even after losing money there. Wall Street firms are warning that revenue from trading and deals will tumble this quarter as financial markets gyrate and commodity prices drop.

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 later pare back operations in the regions after costs and losses swelled following the acquisition.

Losses Mount

In the Americas, Nomura has posted pretax losses for six straight quarters. Nagai, 57, abandoned a goal to earn 50 billion yen 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 investment banks are deepening staff cuts 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.

Nagai, who became CEO in August 2012, has become 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.

Growth Potential

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.

Shares of Nomura have fallen 26 percent so far in 2016, heading for a third year of declines as investors lose 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.

Nomura 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.

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