Nomura said to see up to US$700m annual savings on cuts

[TOKYO] Nomura Holdings Inc expects about US$600 million to US$700 million of annual cost savings from restructuring its European equities business and cutting jobs there and in the Americas, according to people with knowledge of the matter.

Japan's largest securities firm will report details on its savings plan when it releases earnings on Wednesday, said the people, who asked not to be identified discussing private information. Top executives expect the cost cuts to enable Nomura to post a profit from its overseas operations for the current fiscal year, something it last achieved in 2010, the people said.

Chief Executive Officer Koji Nagai is seeking to stem persistent losses overseas by largely closing down the European equities business and cutting jobs in the Americas, according to people with knowledge of the moves. Many large securities firms are having to rely on cost reductions to shore up earnings amid a plunge in trading revenue.

Nomura's Tokyo-based spokesman Kenji Yamashita declined to comment. The firm is scheduled to report quarterly earnings at 3 pm local time on Wednesday. It posted a 63 billion yen (S$766.25 million) pretax loss overseas for the nine months ended Dec 31.

Goldman Sachs Group Inc and Morgan Stanley are among Wall Street firms that moved to counter declining revenue with cost reductions in the first quarter. Other banks, such as Barclays Plc, have been forced to exit certain businesses altogether as their CEOs focus on preserving capital.

Nomura's restructuring of its European equities could affect as many as 1,000 jobs, people with knowledge of the matter said this month. Analysts surveyed by Bloomberg on average expect Nomura to post net income of 174.1 billion yen for the fiscal year through March 31, the smallest profit in four years.

The securities firm is also eliminating about 25 investment-banking positions in Europe and another 20 in the US, people familiar with the matter have said. That's on top of 12 job losses at the division in Asia last month. Nomura will also scale back leveraged financing for buyout deals in the US, shrinking a potentially lucrative business that can also weigh on earnings in volatile markets, the people said.

BLOOMBERG