Japan’s Nomura Holdings to cull 150 jobs globally in a billion-dollar cost-cutting measure

Japanese financial services firm Nomura Holdings on Thursday said it will be cutting US$1 billion in costs on its wholesale business, affecting international and local operations as the bank attempts for a revival.

According to Nomura’s website, the bank’s wholesale division comprises of the global markets segment, which offers research, sales and trading of global securities, and the investment banking segment, which offers capital raising and advisory services.

The largest securities firm in Japan will axe around 150 jobs globally, from America to Europe to Asia including Hong Kong and Singapore as part of the overhaul to its international business, people who know of the matter told Bloomberg.

The Bloomberg sources said around eight out of nine employees in Singapore’s equity research operations segment have been retrenched. In Hong Kong, at least 10 jobs have been let go for its equities business.

Locally in Japan, the bank plans to shutter 30 out of its 156 domestic retail branches, as it faces the challenges of a changing climate of online stock and bond trading.

US$300 to US$400 million in revenue gains expected from overhaul

Nomura’s operations outside of Japan have been in the red for four consecutive quarters, due partly to headwinds in Europe and intense competition in the United States.

Nomura said in an investor day presentation the target of cutting US$1 billion in costs will be achieved over the ‘medium term’, with 60% of the cost cuts to be completed by the end of its fiscal year which ends on March 2020.

The latest measures are expected to help the firm bring in US$300 to US$400 million in revenue gains, Nomura forecasts. The group has set an ultimate target of building a wholesale platform that delivers consistent pre-tax income of US$1 billion, without elaborating on a timeframe.

Cost-cuts long overdue: Analysts

Plans for Nomura to scale back its London office is not surprising, as the firm has around 2,500 staff in the city, and that matches its headcount in Asia, outside Japan. Ever since Nomura bought in on Lehman Brothers’ operations in Europe in 2008, it has been struggling to generate profits there.

Citigroup analysts in a research note called the measures to simplify its business ‘long-overdue’. ‘What remains to be seen is whether revenues grow as planned and the speed at which cost cuts are implemented,’ the Citigroup analysts said.

Credit rating firms have been watching for updates on Nomura’s attempt to revive its business.

The bank had announced for a review in January to relook at its business after it posted its biggest quarterly loss since the global financial crisis and S&P Global Ratings said in February it may consider reviewing the firm's debt ratings if its restructuring efforts are unsuccessful and earnings power remains weak.

Shares of Nomura closed flat on Friday, at ¥419.50, erasing their gains for this year.