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Japan's Nomura Holdings says it will cut US$1 billion in costs

TOKYO -- Nomura Holdings said Thursday it would cut US$1 billion in costs to repair its balance sheet as Japan's biggest brokerage signaled it had all but abandoned its bid to become a global powerhouse.

The Tokyo-based firm, which is trying to recover from an embarrassing insider trading scandal, said it planned to usher in the sweeping cuts by March 2014 across its global operations.

About two-thirds of the cuts would come from regions including the United States and Europe, it said, adding that Nomura would focus on the Asian market as it looked to triple its pre-tax profit over the next four years.

The move is the final nail in the coffin of Nomura's ill-fated plan to be a global investment banking giant after picking up some operations of defunct Wall Street titan Lehman Brothers during the 2008 financial crisis.

The resignation last month of chief executive Kenichi Watanabe, a key driver behind the firm's expansion, had also been widely viewed as a fatal blow to Nomura's heavyweight ambitions.

On Thursday, Nomura said it would “position Asia including Japan as home market” and “shift to a global business model centered on Asia,” adding that it was “critical to improve profitability without relying on a cyclical recovery.”

“The global economy is facing various, serious challenges and is in the midst of a big paradigm shift,” new chief executive Koji Nagai said Thursday.

“The challenges which our corporate and individual clients face are getting more serious and the need for high-valued financial services is rapidly increasing.

“What Nomura must do is acutely sense the changes in our clients' needs ... and flexibly adapt.”

Focusing on Asia was the right strategy because of “abundant funds” available for investment in a region with mature and emerging markets that were a “driver of global economic growth,” the firm said.

Nomura revealed few specifics, saying only that about 45 percent of the cuts would be from “personnel expenses” and that it planned to cut its information technology costs as it “improves business efficiencies, and rationalizes (the) management structure.”

Nomura last year unveiled separate cost savings of about US$1.2 billion — and chopped hundreds of jobs — after posting a net loss of 46.1 billion yen (US$588 million) in the July-September quarter of 2011, compared to a net profit of 1.1 billion yen in the same period a year earlier.

The loss was Nomura's first in 10 quarters and underscored how market turbulence and the eurozone crisis had dented its brokerage and investment banking business.

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