Nomura Plans to Cut Up to 30 Jobs in Americas Equities

 Nomura Holdings Inc., Japan’s biggest brokerage, is planning to cut as many as 30 jobs in part of its Americas equities division this week amid a global reorganization, according to people briefed on the plan.

The reductions will occur as early as today in execution services, which Tokyo-based Nomura is folding into its independent Instinet unit, said the people, who requested anonymity because the cuts haven’t been announced.

Chief Executive Officer Koji Nagai, 53, is targeting profitability for overseas operations by June 2014 as he cuts $1 billion of costs worldwide. Nomura said this month it’s wrapping equity execution services outside of Japan into Instinet, the brokerage it acquired in 2006, as it seeks to save money and focus on electronic trading.

“On the one hand they want to reduce costs and on the other they also want to move to the Instinet system from a trading perspective,” said Mac Salman, a Tokyo-based analyst at Jefferies Group Inc. “That gives them the opportunity to cut costs on the execution side.”

Nomura is reorganizing its equities division into three segments, it said on Sept. 6.

New Model

“We are currently in the process of reducing costs in the Americas in order to transition the equities business to the new operating model” disclosed this month, said Jonathan Hodgkinson, a New York-based spokesman for Nomura. He said he couldn’t comment on the number of jobs to be cut in execution services.

Nagai, who took over from Kenichi Watanabe as CEO on Aug. 1, is overhauling the Japanese bank after costs swelled following its 2008 purchase of Lehman Brothers Holdings Co. operations in Europe and Asia. The company has posted pretax losses abroad for the past nine quarters.

Nomura said this month that it will reduce costs by $210 million in the Americas, $450 million in Europe and the Middle East and $340 million in Asia including Japan, with about 45 percent of the cuts worldwide coming from staff cuts.

Shares of Nomura fell 0.4 percent to 279 yen at 10:14 a.m. in Tokyo. They have gained 8 percent since Nomura unveiled the expense-reduction plans on Aug. 31.

“Equity markets are being dramatically reshaped globally” by economic forces and demands for agency-driven execution, Benoit Savoret, the firm’s global co-head of equities, said in a Sept. 6 statement. The firm’s changes “uniquely position Nomura in this new market environment.”

Europe, Asia

Nomura is eliminating about 100 investment banking jobs in Europe as part of a 30 percent reduction in its workforce in the region, three people with knowledge of the plans said last week.

In Asia, the bank is reorganizing its global finance team into two main streams, an internal memo confirmed by Nomura showed this week. Global finance units within the investment banking and fixed-income divisions will reconfigure into debt origination including debt capital markets, private placements, leveraged finance and private financing activities; and risk solutions, according to the memo obtained by Bloomberg.

Mark Leahy, the head of debt syndicate and debt origination for Asia excluding Japan, said this week that he is leaving as part of the revamp.

Nagai said in an interview this month that it will take time to make a profit abroad as the company will first have to implement the cost savings program by March 2014. Eliminating jobs “will generate restructuring costs after that,” he said.

Nomura’s biggest domestic competitor is also expanding cost cuts. Daiwa Securities Group Inc. said this week that it will eliminate as many as 50 derivatives jobs in Hong Kong and may shrink investment banking and equity research in the city. The reductions are in addition to 500 positions eliminated in Asia and Europe since last October.

“Downsizing Nomura is an anguished option to take when the company is still competing as a global investment bank,” Kouichi Niwa, a Tokyo-based analyst at SMBC Nikko Securities Inc. “But this is an unavoidable option to boost profitability.”