Nomura slashes $1bn in costs
Nomura, Japan’s largest investment bank, is cutting an additional $1bn (£630m) in costs in the second major restructuring of its loss-making overseas operations in less than a year.
The cuts are to come from its wholesale division, which houses investment banking, equities and fixed income operations, and would be completed by the next financial year that runs through March 2014, Nomura said. The new plan will come on top of a $1.2bn cost savings move launched last year.
The streamlining marks the first attempt by new chief executive Koji Nagai to shore up its troubled overseas operations, built in large part on its acquisition of the Asian and European businesses of failed Wall Street bank Lehman Brothers in 2008.
Nagai disclosed the new plan to a gathering of senior managers earlier on Friday, according to executives who briefed media on the meeting.
He had flagged the cost cuts a month earlier when he took the helm from Kenichi Watanabe who was ousted following an insider-trading scandal. Nagai had vowed to take bold action and rebuild the bank from the “ground up”.
The $1bn figure was at the high end of market expectations, said Credit Suisse analyst Takehito Yamanaka, who had estimated Nomura would need to slash $700 to $750m in costs to reach a targeted return on equity of four per cent.
“The number is big but the suggested time horizon is a bit different than my expectations,” Yamanaka said, referring to the March 2014 deadline for completing the cuts. “But that will all depend on the progress. We don’t have details, so at this point it would be premature to call the plan slow.”