Daiwa `to announce sackings'

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The Independent Online
Daiwa Europe, the Japanese securities house, is expected to announce sizeable sackings today within its London operations, the latest in an rapidly lengthening list of blood-letting by City firms reacting to difficult times in the stock and bond markets.

A spokesman would only confirm that an official statement is to be made on staff restructuring. But, insiders said that departures are expected to amount to as much as 10 per cent of Daiwa's 440 London-based staff.

Daiwa's cuts follow hard on the heels of savage pruning at several of its Japanese rivals in London. They have all been caught in a squeeze between particularly difficult conditions for the parent firms in the domestic Tokyo market, and the failure of their costly expansion drive in London to provide the hoped for returns.

Nomura has lost over 40 staff during the past six months, and is said to be well on the way to eliminating its entire equity research operation in London. Yamaichi has recently dismissed some 30 people.

The past weeks and months have been rocked by a steady spate of retrenchment announcements by most of the big names in the City, as firms from Wall Street to Tokyo desperately seek to pare back the cost explosion in their operations caused by reckless expansion during the bull markets of 1993.

The tribulations of SG Warburg, which recently pulled out of Eurobond operations, and has only just gone though a radical management shake-up, have highlighted the perils of this failure to keep costs in line with revenues.

The cuts at Daiwa are expected to occur across a broad range of the European subsidiary's activities, including equities, bonds and asset management, following a detailed group-by-group analysis of operations.

Daiwa's management is said to have reached the conclusion that the markets may not improve significantly for the next 12 months, and with the possibility that matters might still deteriorate, there was no option but to cut costs now.

This latest bout of retrenchment marks another potentially long pause in what at the outset in the 1080s looked to be the unstoppable march of the Japanese investment banking giants through the City.

Having built up sizeable operations in the wake of Big Bang and the opening up of the London market, they were forced into a first bout of cuts during the recession, only to re-emerge with higher hopes and bulging wallets, attracting heavy hitters from rival houses at vast expense.

But the extent of the breakthrough into the London market has not always lived up to expectations, or the amount of effort and money put in. Some of the current cuts, relinquishing strategic areas, as in Nomura's case, appear to amount to tactical retreats.