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[TOKYO] Nomura Holdings's on-again, off-again global expansion is taking another twist with plans to hire investment bankers in the US and Asia even as it trims equity staff in Hong Kong.
Japan's biggest brokerage will recruit about 20 senior bankers to boost its mergers and acquisitions business, global investment banking head Kentaro Okuda said. It cut about 12 Asia equities jobs to focus on more profitable operations, a person with knowledge of the matter said yesterday.
Nomura is seeking to work on more global takeovers involving Japanese companies and reclaim its status as the country's top M&A adviser, a position it hasn't held since 2011. The hiring plans mark the latest effort to expand overseas after previous attempts failed to generate sustained profit growth outside of Japan.
"I'm telling our teams in the Americas to come to Japan and show their faces and ideas to clients," Mr Okuda, 51, said in an interview in Tokyo. "Some people still have the impression that Nomura doesn't have a presence there" because it missed out on buying Lehman Brothers Holdings's US operations during the global financial crisis in 2008, he said.
The bankers to be added in the US will cover industries including hotels, real estate, gaming, financial sponsorship, health care and chemicals, Okuda said. Tokyo-based Nomura will also increase coverage in China, Australia, India, Indonesia and the Philippines, he added.
Mr Okuda said the recruits will be managing directors and executive directors. That's the same level of seniority as 15 bankers Nomura said in October that it hired to expand investment banking in the Americas, including Jefferies Group LLC's Michael Rintoul and First Reserve Corp.'s Frank Kinney.
Nomura added 178 staff in the Americas in the 12 months to September, bringing the number to 2,421, company figures show. That represented a shift for Chief Executive Officer Koji Nagai, 55, who after taking the post in August 2012 spent the next year scaling back operations to cut US$1 billion in costs that ballooned following the purchase of Lehman's Asian and European businesses.
"It's the right direction for Nomura to be selective because resources are limited and it learned its lesson from the Lehman acquisition," said Mitsushige Akino, an executive officer at Ichiyoshi Asset Management Co. in Tokyo. "Human resources are everything when it comes to investment banking." Banks Retrenching The hiring plans contrast with retrenchments at global banks amid slowing economic growth, rising legal costs and stricter regulations.
Deutsche Bank AG is weighing options such as job cuts and the sale of assets as it reviews its strategy, a person with knowledge of the matter said last week. Standard Chartered said this month that it's shutting its equities trading business. Royal Bank of Scotland Group Plc is looking to put most of its Asian corporate banking business up for sale, a person with knowledge of the discussions said this month.
At Nomura, Yasuhiro Fujiwara, Hong Kong-based Asia ex-Japan head of equities, and Vincent Yam, a managing director of equity derivatives in the region, confirmed their departures by phone yesterday. Fujiwara, a former Bank of America Corp. veteran, was one of Nomura's high-profile hires in 2013 as the bank sought to bolster its equities business in Asia.
Shares of Nomura fell 1.7 per cent to 622 yen at 1:42 p.m. in Tokyo. The stock has dropped 21 per cent in the past year, compared with a 7 per cent gain in the benchmark Topix index.
Past Spree Nomura has expanded in the U.S. in the past. The Japanese bank embarked on a hiring spree after losing out to Barclays on buying Lehman's US operation, boosting staff in the Americas to 2,500 in 2011 from about 1,000 in 2009.
While Nomura has posted pretax losses overseas in each of its past four fiscal years, it has been profitable in the Americas in three of them. The company is on course to return to profit abroad in the year ending March, Chief Financial Officer Shigesuke Kashiwagi said in October.
"In the U.S. and Japan, we have a strong pipeline in the health-care, chemical, industrial and automobile sectors now," Okuda said.
The brokerage is also seeking to help state-owned enterprises in China and companies in Australia, India, Indonesia and the Philippines raise funds and make acquisitions, Okuda said. There's a "large fee pool" in China and Australia, he said.
'Getting There' Nomura and Goldman Sachs Group Inc. advised Canada's Talisman Energy Inc. as Repsol SA, Spain's largest energy company, agreed in December to buy the Calgary-based company for US$8.3 billion.
"We're getting there," Okuda said. "It's important to keep it up and land bigger deals." US companies were involved in more than half of last year's $3.4 trillion in takeovers globally, data compiled by Bloomberg show. Nomura was ranked 33rd among M&A advisers in North America in 2014, improving from 56th a year earlier, according to the data.
Among managers of share sales in the US, the company was ranked 30th last year, the data show. On debt offerings it was 20th. As well as investment banking, Nomura's US business ranges from equities and fixed income to asset management and private-equity investing.
In Japan, Nomura was ranked fourth among mergers advisers last year, handling 84 transactions valued at US$17.9 billion, data compiled by Bloomberg show. Morgan Stanley topped the list after its venture with Mitsubishi UFJ Financial Group Inc. worked with Suntory Holdings on its US$16 billion purchase of US distiller Beam Inc., Japan's biggest takeover in 2014.
"It's a fact that we're not in the No 1 spot," said Mr Okuda. "We need to seize it back."