If Nomura wants to save $1bn, it may need to make 64% of its European staff redundant

History, it would appear, is repeating itself.

Nomura's big problem in London has always been its capriciousness. One moment it's committed to the European market; the next, it's not.

We've been saying for a long time that Nomura's position in Europe looks untenable. Costs are simply too high. Revenues are simply too low. In the first quarter of this year, losses at the bank's wholesale business widened to Y31.7bn in Europe. Losses at the Asian wholesale operation were just Y1.5bn.

This makes the European investment bank look like the target in what the Wall Street Journal says are a new round of cost cuts totaling as much as $1bn.

CEO Kenichi Watanabe already announced a "cost reduction programme in wholesale" at the end of July. Insiders tell us this aimed at $400m of cost savings. If implemented, the new plans will be of a significant magnitude higher.

So, how many European bankers would Nomura need to eliminated to save $1bn from its wage bill? The simple answer is: nearly two thirds.

According to the WSJ, Nomura has 4,436 employees in Europe. According to various articles in the

Financial Times in April, around 4,000 of them are in London - of whom 3,500 are housed in the bank's new building near London Bridge with bee hives on the roof.

Nomura doesn't break out how much it pays staff in its wholesale bank. However, based on averages per head for full year 2011 extrapolated from the results of JPMorgan, Goldman Sachs and UBS, it seems fair to assume average annual compensation per head of $350k in Nomura's wholesale banking business. This being the case, the bank would need to make 2,857 people redundant to achieve the required $1bn in savings.

Nomura's already started pulling out of Russia and has retreated from European prime broking. In future, the Wall Street Journal says it will focus on businesses where, "it's strong." The bank's investor presentation in March gives some clues as to what these might include: M&A, ECM, leveraged solutions and leveraged finance.

Nomura has a strong equity franchise in Europe. This leaves fixed income looking particularly vulnerable, which is a shame as Nomura has done well building share in areas like FX. Life looks particularly uncertain for Nomura's credit and structured credit traders.

Nomura declined to comment on the WSJ article.

Headhunters say fixed income professionals coming out of Nomura will struggle to find employment elsewhere. "Nomura's sub par on the pecking order," says one. "In the past, they might have been able to go somewhere like Mizuho, but they're not hiring any more."