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Nomura Prop Traders Are Nearing Exit as London Unit Closes, Sources Say

Updated on
  • Japanese bank earlier closed Hong Kong-based trading desk
  • Group used Nomura’s capital to bet on stocks, currencies, debt

Nomura Holdings Inc., the Japanese lender that has recently struggled to make money from overseas trading, shut a loss-making proprietary unit in London and four of the group’s top managers may leave, according to people with knowledge of the matter.

The group, run by Jonathan Och, employed 10 money managers and used capital provided by Nomura to bet on stocks, bonds, currencies and distressed debt, the people said, asking not to be identified because the information is private. While the people didn’t say whether Och remains at Nomura, four senior portfolio managers, Stephen Kirkham, Jonathan Fittall, Dominic Hubble and Guy Joseph, are close to exiting, they said.

The move follows a multiple-year retreat by global banks from proprietary trading amid a wave of new restrictions imposed since the financial crisis. Deposit-taking lenders in the U.S. are restricted from the practice under the Volcker Rule, while lenders across Europe have to wall off the operations into separate units.

While Tokyo-based Nomura isn’t subject to the same level of restrictions, the lender has been scrutinizing its proprietary trading operations. The bank shuttered a Hong Kong-based desk that wagered on credit products, Bloomberg reported in June.

Nick Probert, a spokesman for Nomura in London, declined to comment.

Och, a former executive at Royal Bank of Scotland Group Plc, joined Nomura in 2011 and was made the head of the proprietary unit earlier this year, the people said. He didn’t return calls or answer messages seeking comment.

The London proprietary unit has made money for Nomura in the past and was profitable last year, one of the people said. A series of trades went awry in the first half of the year that triggered a loss for the desk, said the person.

Read more: Trading Slump Breaks Nomura Profit Streak, Roils Overseas Unit

Nomura reported a decline in profit on Monday, the first in five quarters, while earnings from operations outside of Japan was the smallest in six quarters. A drop in fixed-income trading overshadowed an increase in brokerage commissions and investment-banking fees at Japan’s biggest brokerage.

“We barely managed to stay in the black overseas,” Chief Financial Officer Takumi Kitamura said at a news briefing in Tokyo.

Nomura hired senior Citigroup Inc. credit trader Fred Jallot earlier this year to lead its European markets business.

(Updates with reference to performance in 7th paragraph.)
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