In April 2019 it will be three years since Nomura did the deed - since that one weekend in late spring when it unexpectedly decided to pull the plug on its European equities business and eliminate 500 people almost overnight. “We did let people go back to their desks. We did let people say goodbye to each other. We didn’t let people mill around for a few days,” said Jonathan Lewis, Nomura's European chief executive officer of the incident. In other words, Nomura tried to be nice even while it was wielding the hatchet. But for people working at Nomura's global markets business in London, such niceties no longer count.
"I just don't understand their strategy," says one trader at the Japanese bank in London. "They don't seem to have one. They're too small to make a proper impression outside of Asia and they keep hiring people in and then firing them again when they change their mind about what they're doing. One month they're incredibly keen and offering people big packages to join, and then they're letting go of them."
Nomura declined to comment for this article, but the bank might argue it's not quite as inconsistent as all that. After all, Nomura has been rumbling about growing in America and cutting costs elsewhere since at least last May's investor day. It's just that today's announcement of another quarter of losses and a steep fall in revenues from the fixed income sales and trading business makes cost cutting all the more imperative. It doesn't help that future cuts are starting to sound more like a dismemberment: Nomura CFO Takumi Kitamura says the bank is embarking upon a period of “selection and focus”, which Reuters says usually implies the disposal of assets in Japanese corporate-speak.
All will become clear when Nomura presents the conclusions to this interlude of selection and focus in April 2019. Unfortunately for its salespeople and traders, April is also the month when Nomura pays its bonuses. In the worst case scenario, therefore, people who've worked a full year will find themselves cast adrift without anything to reflect their performance. Such things have not been unheard of at Nomura's London office in the past.
For the moment, Nomura's London fixed income staff are on tenterhooks as they wonder about a) their bonuses and b) their jobs. The Japanese bank already made around 50 redundancies this week in London fixed income sales and trading, and headhunters say they've seen everyone from lawyers to salespeople to traders emerging from the bank's office on Angel Lane. Some of the recently laid-off are understood to be in emerging markets, where Nomura also made cuts in July last year. Additional London redundancies seem an inevitability - as Bloomberg points out, Nomura employs 3,000 people in Europe and they generate ¥27.3bn in quarterly net revenues. By comparison, Nomura's 2,384 employees in America generate ¥41.3bn. Somehow, Europe just doesn't look very worth it.
While they await their fates, some Nomura traders express regrets at having joined the Japanese bank in the first place. "They really wanted to hire me," says one trader who was put at risk. "It makes no sense." Last year, Nomura dumped a lot of traders it recruited in 2017. More recently, the Japanese bank has been hiring again as it builds-out a Client Financing and Solutions (CFS) structured credit team under John Gousias, who joined from Millennium. Will Gousias et al still be there in 2020? Wait until April to find out.
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