December 2, 2019 / 3:36 PM / 12 days ago

Japan's Nomura picks operations chief as new CEO to lead turnaround

TOKYO (Reuters) - Nomura has picked joint operations chief Kentaro Okuda to lead a turnaround of Japan’s biggest brokerage and investment bank, taking over from chief executive Koji Nagai, who will become chairman.

Japanese brokerage Nomura Holdings newly appointed chief executive Kentaro Okuda speaks at a news conference in Tokyo, Japan in this photo taken by Kyodo December 2, 2019. Mandatory credit Kyodo/via REUTERS Mandatory credit Kyodo/via REUTERS

The reshuffle was announced on Monday as Nomura posted its strongest quarterly profit in more than 17 years. The brokerage is in cost-cutting mode after last year recording its first annual loss in a decade.

With years of experience in investment banking, Okuda, 56, has also worked overseas, including as head of Nomura’s U.S. arm. He became a contender to succeed Nagai when he was promoted to joint chief operating officer in April 2018.

“Nomura as a whole group can be stronger by taking good things from outside Japan. This is the area where I can show my originality,” Okuda told a news conference.

Okuda, who joined Nomura in 1987, will become CEO on April 1, 2020.

Nomura’s reputation took a hit in May when it was censured by regulators after it was found to have leaked information related to listing and delisting criteria to clients.

That led the government to omit it as an underwriter in a Japan Post share sale and Nagai taking a 30% pay cut for three months.

The incident came a month after Nomura reported an annual loss and said it would not pay bonuses to directors.

Nagai, 60, said on Monday there was no direct connection between the management change and the scandal over leaked information.

“I have been working with Okuda on a business improvement plan after the information leak in May. I’m not worried about him taking over because I know he can continue that effort,” Nagai said.

Nagai is scheduled to speak to both foreign and domestic investors at an investment forum on Tuesday.

While its bottom line improved in the last quarter thanks to a recovery in its wholesale division, Nomura is still in the midst of a restructuring which includes more than $1 billion in cost cuts and the closure of some of its retail branches.

Nomura said in October it had achieved about 60% of the 140 billion yen ($1.3 billion) in targeted cost cuts and Okuda told reporters on Monday it would continue the effort.

Nagai, a Nomura veteran, took the helm in 2012, after the previous CEO resigned over an insider trading scandal.

Nomura’s shares have recovered strongly since the information leak, rising by almost 60%. They closed up around 0.3% on Monday at 562.3 yen.

($1 = 108.6400 yen)

Reporting by Tokyo bureau; Editing by Alexander Smith and Mark Potter

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