Japan’s Nomura unveils massive cost costs

7 Sep 2012 – AAP –

Nomura Holdings says it would slash $US1 billion ($A984.8 million) in costs to repair its balance sheet as Japan’s biggest brokerage signalled the end of its ambitious plan to become a global powerhouse.

The Tokyo-based securities giant, which is trying to move past an embarrassing insider trading scandal, said on Thursday it would usher in the sweeping cuts across its global operations by March 2014.

About two-thirds of the reductions would come from regions including the US and Europe, it said, adding that Nomura would focus on the Asian market as it looked to triple its pre-tax profit over the next four years.

The move marked the final nail in the coffin of Nomura’s ill-fated plan to become a global investment banking giant after buying some operations of defunct Wall Street titan Lehman Brothers during the 2008 financial crisis.

The resignation last month of chief executive Kenichi Watanabe, a key driver behind the firm’s expansion, due to an insider trading scandal had also been widely viewed as a fatal blow to Nomura’s heavyweight ambitions.

On Thursday, Nomura said it would “position Asia including Japan as home market” and “shift to a global business model centred on Asia”.

“The global economy is facing various serious challenges and is in the midst of a big paradigm shift,” new chief executive Koji Nagai said on Thursday.

“The challenges which our corporate and individual clients face are getting more serious and the need for high-valued financial services is rapidly increasing.

“What Nomura must do is acutely sense the changes in our clients’ needs … and flexibly adapt.”

Focusing on Asia was the right strategy because of the “abundant funds” available for investment in a region with mature and emerging markets that were driving the global economy, the firm said.

Nomura revealed few specifics of its cost cuts, saying only that about 45 per cent of the reductions would be from “personnel expenses”.

The firm’s shares closed 2.3 per cent higher at ¥266 ($3.40) in Tokyo.

Nomura last year unveiled separate cost savings of about $1.2 billion and chopped hundreds of jobs after posting a net loss of ¥46.1 billion ($588 million) in the July-September quarter of 2011, reversing a net profit of ¥1.1 billion in the same period a year earlier.

The loss was Nomura’s first in 10 quarters and underscored how market turbulence and the eurozone crisis had dented its brokerage and investment banking business.