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Squeezed at home, Japan's Nomura seeks to push into Wall Street's home turf
June 19, 2017 / 9:12 AM / 6 months ago

Squeezed at home, Japan's Nomura seeks to push into Wall Street's home turf

HONG KONG/TOKYO, June 19 (Reuters) - Under pressure in Japan from Wall Street rivals and anticipating more deals in the United States or by American companies overseas, Nomura Holdings is boosting its U.S. investment banking business, including some senior hires in the technology and finance sectors.

Two sources familiar with the matter said Nomura plans to add a dozen senior- and mid-level investment bankers over the next 12 to 18 months in the United States, covering mergers and acquisitions, equity capital markets and leveraged financing - building out a team of around 200 there.

Nomura has poached investment bankers from global investment banks as well as boutiques such as Jefferies and Houlihan Lokey since the beginning of this year.

It has hired Jim Voorheis from UBS, where he was head of speciality finance in the Americas, as managing director for its financial institutions group, and Credit Suisse veteran Thomas Chung as managing director for U.S. equity capital markets.

The number of hires could eventually be much higher, one of the sources said, depending on deals momentum and the outlook for the profitability of Nomura’s international operations.

The sources, who have direct knowledge of Nomura plans, did not want to be named as they were not authorised to speak to the media.

They said Nomura has made a U.S. expansion of its wholesale business, which includes global markets and investment banking, one of its priorities.

This comes after a major restructuring – including a big shrinking of its operations in Europe last year - following its disastrous acquisition of Lehman Brothers’ Asian and European businesses in 2008. That led to internal clashes, and was followed by six consecutive years of losses for its international operations.

As a result previous plans to expand in the U.S. were put on hold and Nomura reduced its total staff across all divisions in the Americas to 2,279 at the end of 2016 from 2,501 a year earlier. The number had crept back up to 2,314 by the end of March.

“STRONG CANDIDATE”

In March, it named company veteran Kentaro Okuda, head of investment banking and a contender to become Nomura’s future chief executive, as head of its Americas arm.

“He knows all of our clients from Japan and he can look after their deals,” said one of the sources. “If Okuda does well in the U.S., he might emerge as a strong candidate to become group CEO.”

Two of the sources said Nomura plans to bolster its coverage of the technology, financial and healthcare sectors in the U.S. where it sees growing dealmaking opportunities within the country and outside.

It expects to benefit from American companies doing deals in Japan, a market where it has strong presence and contacts in the local corporate sectors, they said, and even China - where it has been increasing its presence.

Nomura currently only has about 0.5 percent of the U.S. investment banking fee pool. Even getting this up a little can make a meaningful difference given its size – the fees were worth an estimated $39.6 billion last year, one of the sources said.

In response to Reuters queries, Nomura said that it sees its Americas business as a key element of its international strategy and it would continue to make “strategic additions” in areas, including sales and trading, and financing.

“Nomura is ... well-positioned to connect markets east and west. Part of our continued strategy is to capture more cross-border client transactions,” it said, without giving details on expansion plans.

In part, the U.S. push is a response to concerns at home.

Once a go-to bank for the Japanese firms and top of the Japanese M&A league table for years, Nomura took the number 6 rank in the home league table last year, down from second position in 2015, according to Thomson Reuters data.

In the first quarter of this year, the bank slipped to 11th position, lagging behind Goldman Sachs, JPMorgan, Morgan Stanley, and even smaller domestic rival Daiwa Securities.

In the overall investment banking fee league table, Nomura’s share of the revenue in Japan has dropped to 14 percent last year from 18 percent in 2008, the data shows. (Reporting by Sumeet Chatterjee in HONG KONG and Emi Emoto in TOKYO; Additional reporting by Olivia Oran in NEW YORK and Tom Wilson in TOKYO; Editing by Clara Ferreira Marques and Martin Howell)

Our Standards:The Thomson Reuters Trust Principles.
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