Primary Hong Kong news media Sing Tao News Group recently reported that leading Japanese securities firm Nomura is re-examining its Shanghai joint venture strategy as its business losses in China continue to worsen. The firm’s subsidiary Nomura Orient International Securities (NOIS) has followed the lead of Morgan Stanley and Goldman Sachs in terms of its shrinking footprint in China: management reorganization and layoffs have occurred, and many employees have resigned. In the meantime, Nomura has cut loose about 10 Hong Kong-based investment bankers, including some who focused on China-related deals. The Hong Kong layoffs were announced very recently and affected both junior and senior bankers, including managing directors and executive directors. Kenji Teshima, chairman of Nomura’s China Business Committee, said that now is a good time to review and re-evaluate the business.
China’s Zero Covid restrictions during the pandemic seriously affected the business’ expansion during that time. More recently, the market environment has undergone major changes that affect Nomura’s operation in China. The profitability of NOIS has continuously deteriorated since its establishment at the end of 2019.
According to available documents, the losses of NOIS more than doubled last year. Although the organization’s client list and assets under management continued to grow, successive years of losses have caused concerns among Nomura’s partners. Moreover, many department heads working for NOIS have resigned since the beginning of this year, including the heads of wealth management, compliance and risk management.
Source: Sing Tao, October 26, 2023