Nomura cuts Asia ex-Japan equities jobs

The move by Japan’s largest brokerage follows cuts by Barclays, StanChart and Jefferies.

Nomura cut around 30 jobs in its Asia ex-Japan equities business this week, the latest investment bank to cut costs in the region, a source familiar with the situation told FinanceAsia on Thursday.

The job losses in Asia follow much deeper cost cuts in its European and US operations announced earlier this week as the Japanese brokerage looks to stem years of losses at its overseas operations. 

Nomura is not alone in its efforts to slim down in Asia. Thursday's job cuts follow a much deeper retrenchement by Barclays and Standard Chartered from the region since last year. 

The Japanese bank's Asia ex-Japan layoffs involve both senior and junior staff in the cash equities, equity sales and trading, equity research as well as equity syndication departments.

Some of the senior departures include Michael Kurtz, global head of equity strategy and chief Asia ex-Japan strategist, as well as Stanley Wong, head of North Asia equity distribution, according to separate internal memos seen by FinanceAsia.

The Japanese brokerage also cut staff in its Asia ex-Japan investment banking team last month, which includes corporate finance as well as equity and debt origination, by around 12 people. Mark Williams, Nomura's Asia ex-Japan head of investment banking, was among those who left.

Sources said the reductions are a result of Nomura’s annual strategic review for the last financial year which ended March 31. 

The reductions were mostly decided after individual performance reviews, a source familiar with the situation said.

Restructuring

The vacancy created by Kurtz’s departure will be filled by regional heads of the equity research team, which includes Wendy Liu for Greater China, Michael Na for Korea, Prabhat Awasthi for India and Mixo Das for Southeast Asia.

“Going forward, our equity research strategy franchise will be increasingly regionally and country focused,” Nomura said in one of the internal memos co-signed by head of Asia ex-Japan equity research Jim McCafferty and head of Asia Pacific equity research Jun Konomi.

For sales and trading, Nomura has appointed James O’Neile as head of Asia ex-Japan equity sales on top of his current role as head of Japan equity sales in Asia ex-Japan.

Meanwhile, Wong’s role will be mostly filled by Miriam Chan, who was appointed head of Hong Kong and China cash equities sales. She will be joined by Yuki Saito, who heads Asian cash equities sales to Japanese institutional clients.

The equities division will continue to be led by Daisuke Mototani, head of equities in Asia ex-Japan.

Falling numbers

Nomura’s headcount reductions underscore the difficulties in equities in the region, which has witnessed falling trading volumes and stiffer competition from local players particularly the Chinese brokers.

In its annual report, the Japanese bank has not disclosed the exact profit breakdown by region but sources familiar with the company said the Asia ex-Japan business as a whole has been unprofitable since it acquired Lehman Brothers’ Asia operations in 2008.

For the last two financial years, though, Nomura's Asia ex-Japan business has turned profitable. In the 2014/15 financial year it reported a pre-tax income of ¥34.6 billion ($316 million), while in the first nine months of the 2015/16 financial year pre-tax income was ¥22 billion, according to the bank's financial statements. 

In terms of revenue, Asia ex-Japan made the smallest contribution in the 2014/15 financial year among the four major regions. Japan accounted for the most revenue, followed by EMEA (Europe, the Middle East and Africa) and Americas, according to the bank's annual report.

Nomura’s pre-tax income for the wholesale division (global markets and investment banking) declined 26% year-on-year to ¥82.2 billion globally in the same year.

Earnings for the 2015/16 financial year will not be disclosed until April 27, but former chief financial officer Shigesuke Kashiwagi has already decided to postpone the target to achieve pre-tax income of ¥50 billion for its overseas operations. The bank originally planned to reach the target by the end of March.

Group CEO Koji Nagai also revised the bank's wholesale net revenue target for the 2019/20 financial year to $7.9 billion from $9.8 billion previously.  

The decision to reduce Asia headcount came shortly after Nomura decided to close its equity research, underwriting and derivatives businesses in Europe, leading to a loss of around 500 to 600 jobs in the region. At the same time it also scaled back its operations in the Americas.

Nomura is the fifth bulge-bracket bank that have decided to shrink the Asia-Pacific equities business. Standard Chartered closed the Asia equities franchise earlier last year, followed by Jefferies which reduced headcounts in cash equities by around 20 people in December.

Malaysia's CIMB laid off 32 employees from its cash equities and investment banking divisions in Hong Kong in January this year. The latest withdrawal was Barclays, which exit its cash equities in Asia towards the end of that month and left at least 230 people jobless.

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