As reportsemerged of plans by NomuraHoldings Inc. to scale down some overseas operations that have beena drag on the top Japanese brokerage, investors piled into the company'ssinking stock.
During trading hours April 12, various news outlets, citinganonymous sources, reported that Nomura plans to cut jobs in the Americas andEurope, with The Nikkei saying almost1,000 positions could be eliminated. Bloomberg News reported the company islooking to shut its equity operations in Europe. The company's businesses inthe Americas and Europe together had more than 5,900 employees as of Dec. 31,2015.
Nomura shares jumped 7.43% at the April 12 close of trading.Over the 12 months through the previous day, the stock was down more than 37%,trading at 57.6% of book value, compared to 97% a year earlier.
After market close, Nomura loosely confirmed the reports,saying it will close "certain businesses" in the region of Europe,the Middle East and Africa. In the Americas, the brokerage said it will"rationalize certain areas." Nomura said it will provide more detailsof the plans April 27 when it releases earnings for the fiscal fourth quarterand full year.
"This exercise will deliver significant efficienciesand cost savings for Nomura, refocusing the firm's activities and reallocatingresources towards its areas of expertise and most profitable businesslines," Nomura COO Tetsu Ozaki said.
The company said its decision to trim operations in theAmericas and Europe is due to market volatility, a drop in liquidity anduncertainty in the global economy since the second half of 2015.
But Nomura's operations in the regions have been drainingmoney for much longer. Nomura took over Lehman Brothers businesses in Europeand Asia in 2008, but those assets quickly became a liability — Nomura has beenin the red in Europe in most quarters since then.
Nomura may need to cut back on its equity operations inEurope for company-specific reasons, rather than because of the generalbusiness environment in the region, as stocks are still in demand there becauseof low rates, said Takehiro Noguchi, a senior economist at Mizuho ResearchInstitute.
The company has not been faring so well in the Americaseither, making pretax losses for six straight quarters in the U.S.Elsewhere in the region, Nomura has businesses in Brazil, Colombia and Canada.