TOKYO (Reuters) - Nomura Holdings Inc aims to increase its share of business arranging foreign exchange hedging, acquisition finance and other deal-related services for corporate clients in the United States, the CEO of Japan’s biggest investment bank said.
The bank is in the process of re-allocating global resources to shift its growth focus to the Americas, which has the world’s largest pool of investment banking fees. It is trying to build up businesses there without taking on bigger risks.
“Our key words are ‘America’, ‘corporate clients’ and ‘solutions business’,” Koji Nagai told Reuters in an interview.
He said Nomura’s global markets business - involving the trading of fixed income and equity - remains an important source of revenue but is not currently under consideration for further expansion.
“Rather, our focus is on advisory and primary business, which are not subject to market risks to the same degree and do not use our balance sheet much,” he said. Primary business includes helping client companies issue stocks and bonds.
“In addition, we will expand our solutions business such as acquisition finance and foreign currency exchange services for deals we advise on.”
Nagai forecasts the expansion of Nomura’s client financing and solutions business in the United States and elsewhere to boost revenue by $250 million in the medium term.
Nomura has made U.S. expansion of its investment banking arm one of its priorities as it strives to earn more stable income from advisory services. Its recent hires include bankers covering healthcare, technology and financial services.
The U.S. push comes after major restructuring in 2016, which included significantly shrinking its European operations, resulting from its acquisition of Lehman Brothers’ Asian and European businesses in 2008.
Nomura suffered three consecutive quarters of pretax loss in its overseas business through September. Earnings in the latest quarter were also weighed down by a one-time 20 billion yen ($181 million) charge, part of a settlement with U.S. authorities regarding the sale of residential mortgage-backed securities before the 2008 financial crisis.
“We will absolutely keep our global platform though we have been shrinking businesses that are unprofitable and not needed by our clients,” Nagai said.
($1 = 110.3700 yen)
Reporting by Taiga Uranaka and Taro Fuse; Editing by Christopher Cushing