Nomura Holdings Inc. is making a renewed push into the European equities business seven years after pulling back from much of the trade, signaling a wider expansion amid a slide in profit.
(Bloomberg) — Nomura Holdings Inc. is making a renewed push into the European equities business seven years after pulling back from much of the trade, signaling a wider expansion amid a slide in profit.
The Tokyo-based firm has made a comeback in corporate equity derivatives in addition to Delta One products that help investors track underlying assets for Europe, the Middle East and Africa, Simon Yates, Nomura’s global head of equities, said in an interview. The company has also started debt financing business in those regions.
Since January, the firm has hired more than 30 executive directors or managing directors for equities globally from the likes of Goldman Sachs Group Inc., JPMorgan Chase & Co. and Credit Suisse. About half of those have yet to join the firm. The goal is to get private equity firms, hedge funds and large companies as clients, Yates said.
“What we’re looking to establish is a much, much lighter cost-based business, not full service, and we think we can do that with a small headcount,” he said of the bank’s plans for Europe. “This is a very selective re-entry into businesses really copying our US model.”
The renewed focus on trading by Japan’s biggest brokerage comes at a time when the firm is seeking to revive earnings growth after three years of profit declines. The firm took a roughly $2.9 billion hit from its dealings with family office Archegos Capital Management LP, which collapsed in 2021.
The company is now separately looking to expand its European trading desk focused on emerging-market corporate debt, a business the brokerage cut repeatedly in recent years. Nomura’s global markets team accounted for half of its revenue in the year ended March, according to company filings.
In EMEA, new hires this year include Keyvan Zolfaghari from Goldman, Michael Witzenfeld from Credit Suisse, Rob Hammond from Mitsubishi UFJ Financial Group Inc. and Stephane Redon from Bank of Montreal. Stela Modrakovic, Stephanie Peritore and Aous Labbane have also joined. For Delta One in the region, the firm is targeting swap balances of $3 billion by year-end.
The company said in 2016 it would close a range of European equity businesses, from research to derivatives and financing, as part of an overhaul designed to turn around foreign operations.
In the US, new joiners include Joshua Lukeman and Susan Enright from Credit Suisse, Ganapathy Pattabiraman from Deutsche Bank AG and Jason Jerutis from Bank of America Corp. “We’re trying to be quite surgical in getting people who can do this much more structured business,” Yates said.
The world’s biggest banks shared about $14 billion in revenue from equities trading in the first quarter of 2023, an 18% drop from the same period a year earlier, according to data from Coalition Greenwich. The industry is dominated by JPMorgan, Goldman Sachs and Morgan Stanley, Bloomberg Intelligence data show.
In Asia excluding Japan, Nomura will offer a full equities trading business including cash and synthetic prime brokerage and structured notes. New hires include Arnaud Lannic and Florence Lam, previously at Bank of America, Clement Florentin from Credit Suisse, and Hally Seo and Harvey Zhang from JPMorgan.
Yates said the collapse of Credit Suisse had made a lot of talented recruits available, and meant that clients were seeking to replace the Swiss bank as a counterpart.
“The one thing that would really help our European effort would be a better market environment, a lot of interest in European stocks,” he said. “But I think we have to get past the concerns of very high inflation in the UK and the possibility of a quite hard recession.”
Revenue at Nomura’s global markets division rose 18% last fiscal year to 656.3 billion yen ($4.7 billion). The team intends to increase its headcount by 5% by March 2025 while rebuilding the foreign exchange business in the US, among other measures.
–With assistance from Donal Griffin.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.