Nomura Holdings Inc.'s repeated opportunistic attempts to expand overseas are credit negative, Moody's said.
In a Feb. 21 report, the rating agency noted that Nomura is keen on growing overseas despite almost a decade of losses outside Japan. It added that the company's competitiveness in its global wholesale businesses will remain weak because of a lack of size.
While Nomura needs to build scale to be more competitive against large rivals, Moody's added, it also likely wants to avoid being named a global systemically important financial institution so as to circumvent tougher capital requirements.
In April 2017, the company initiated a financial technology program in India to help startup companies build solutions for capital markets and investment banking. In late 2017, it announced plans set up a retail brokerage business in China and said it was open to making acquisitions in the U.S. to bolster its investment banking operations there.
In January, Nomura said it recruited 15 senior investment bankers in the U.S., while its unit Nomura International Plc obtained a license to open a representative office in Bahrain.
Nomura's overseas businesses have posed a drag on the company's profitability while increasing its earnings volatility, Moody's noted. This contrasts with its domestic operations which "show upside potential, because of their large scale and dominant market position."