There is a danger of headcount reduction at Nomura in Europe

1 November 2010

2 minute read

There is a danger of headcount reduction at Nomura in Europe

Quietly, Nomura has been reducing headcount in Europe.

The three months to September are usually when banks add headcount. At this time of year, graduate trainees typically arrive. Despite this, Nomura disclosed last week that headcount in Europe was down by 28 people. When the addition of 150+ graduates is factored in, this speaks of disappearing staff.

While European headcount has been trimmed, US headcount has been inflated. In the three months to September Nomura added 245 people in America. According to the Wall Street Journal some of these US hires were recruited on, 'generous two year guarantees.' If business doesn't go to plan, those US staff will still need to be paid. They won't be the ones being let go.

Nomura denies that staff in Europe have been made redundant. Instead, says a spokesman, people have been shifted to the US, and there has been 'churn' - implying that some of those who've left in London haven't been replaced.

The spokesman also says there are no plans for redundancies in future. However, the Financial Times says Nomura needs to cut its compensation bill.

For the moment, business at Nomura certainly doesn't seem to be going to plan. The investment banking (advisory) business has made a loss for the past two quarters. Only the markets business dragged Nomura's wholesale division back into profit last quarter, and expenses there are running at 85% of revenues.

Moreover, the bank's strategy, detailed in its presentation, is all about further expansion in the US. Nomura's bankers in London have reason to be wary. The danger is that Europe will be at the forefront of any cost cutting in future.

AUTHORSarah Butcher

Global Editor

Vi
Vitesse
14 January 2011
I think Nomura thought they had bought the golden egg for 2 dollars when they bought Lehman's. It was destined to fail with such different cultures.
What they did was get rid of the majority of their front office staff who had a risk adverse culture because that is Japanese way. Took on probably 4 or 5 times more traders from a bank with a huge risk taking culture, so much so that they had to file for chapter 11. Then said to the new guys you can't take as much risk as you used to at Lehmans you have to do it the Japanese way. So all they have done is increased their headcount buy 5 times.
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em
emilio13
1 December 2010
Nightmare firm. Serious lack of infrastructure vs. ambitions & a huge lack of discipline, plus systems are rubbish. Add the old-Nomura staff who are very risk-adverse vs the testorone-driven revenue-generators bought-in on huge guarantees & it's a long-term fail for sure. And yes, they will run of out funds at some point and have scale-back.
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Pa
Patient
3 November 2010
Sadeq Sayeed spent a decade at the bank and transformed it during his time there, so there is no doubt that he was a big loss. That said, although the strategy would have been different, Im not so sure he would have been able to do much more than is being done at Nomura by Bhattal. It is a difficult job to transform a culture like that of Nomura and to build a competitive Asian bank. Lets give Nomura more time, although I hear you, Mr. No-More-A, there is a strong chance they run out of capital because of their expensive approach to US expansion.
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PB
PB GUY
2 November 2010
Nomura does have a Prime Brokerage department - think you are mistaken sunshine
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Dr
DrunkenMunkey
2 November 2010
Amen to the comment about how the Japanese decide on pay... I deserve a 50k bonus but only get 25k - EVERY YEAR
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