Nomura launches global jobs cull

MORALE IN the global securities sector sustained a double blow yesterday after Japan's Nomura Securities and America's Bankers Trust said they were cutting staff worldwide after suffering larger-than-expected losses because of recent market turmoil.

The Nomura president and chief executive, Junichi Ujiie, said Japan's largest securities firm will cut 2,000 jobs in Japan and reduce operating costs overseas by 20 per cent. The firm disclosed losses of $1.5bn (pounds 890m) after tax in the six months to the end of September, mainly as a result of the Russian bond default and losses in the US mortgage-backed securities market. The US losses have forced the firm to inject $1.2bn of new cash to recapitalise the American business.

Nomura said that the scale of job cuts in London and New York has yet to be determined. A spokesman stressed that the 20 per cent figure covered "expenses, not jobs".

Other measures, such as reducing IT spending and a reorganisation of Nomura International's legal structure in the UK, would mean that the cuts in full-time staff jobs may be minimal. There are also 500 people in London employed on project-related contracts: these jobs are more immediately vulnerable than core staff.

Nomura employs 16,000 full-time staff worldwide, of which 1,900 are in the UK, mainly at Nomura's investment banking operation, Nomura International. This investment banking arm reported a pre-tax loss of pounds 293m, mostly as a result of Russian government bonds.

Nomura stressed yesterday that most other core elements of its investment banking operations were "extremely" profitable. This includes global equities, foreign exchange and arbitrage trading.

Nomura's Principal Finance Group, the private equity operation headed by Guy Hands, which owns William Hill the bookmaker, has made pounds 1bn for the bank since it was set up four years ago and has further "embedded" profits yet to be realised of pounds 800m. Mr Hands said yesterday that he hoped to double operating profits to pounds 200m a year in the next three years.

Mr Ujiie said Nomura hoped that the measures would result in a quick return to profitability. Nomura, he said, wanted to reach 240 billion yen (pounds 1.2bn) in pre-tax profits by the year ending March 2001.

"With these plans we are certain we will continue to commit to the global capital market as a leading global investment bank." Mr Ujiie said.

Bankers Trust, which through its investment banking arm BT Alex.Brown acquired the cash equity business of National Westminster Bank earlier this year, said it would be seeking cost savings of $300m, or 8 per cent, after sliding $488m into the red in the third quarter, again because of emerging markets losses.

However, shares in BT, America's seventh-largest bank, rose as investors pinned their hopes on a bid for the bank by Deutsche Bank.

Chairman Fred Newman said the firm will take a restructuring charge in the fourth quarter to cover a cost-cutting programme.

"The programme will target all costs, but will focus primarily on personnel and agency and professional services costs."

Last week BT Alex.Brown closed its London-based emerging markets equity business with the loss of a dozen jobs.