Nomura Holdings Inc., Japan’s largest brokerage, is now focusing on growth after spending years revamping its wealth management division. This division, which brings in a quarter of the company’s revenue, used to focus on serving a broad range of Japanese investors. Now, it’s shifting its attention to wealthier clients.
Go Sugiyama, the head of Nomura’s wealth management, says the company is done with cutting staff and is now looking to hire mid-career professionals. Nomura is also open to acquiring other companies to expand its business.
Around the world, banks are trying to strengthen their wealth management divisions, inspired by big players like Morgan Stanley and UBS. For Nomura, its domestic retail business has been a stable source of profit, helping balance out the occasional losses in its global trading and investment banking operations. However, with increasing competition and the rise of online brokers, Nomura had to rethink its strategy.
In 2019, Nomura started to shift its focus towards managing the assets of wealthy households, moving away from relying on commissions from securities transactions. The company also reduced staff and consolidated branches.
Sugiyama believes this restructuring has gone well, but the road ahead might be tough. A recent stock market slump following an unexpected interest rate hike by the Bank of Japan has made some Japanese investors hesitant to put more of their money into the market. However, Sugiyama remains optimistic, noting that Nomura’s wealth clients actually bought more products during the market downturn.
He also sees the Bank of Japan’s policy changes as a positive, offering more investment options for clients, such as bonds.
Nomura’s wealth management division has consistently performed well over the years. It has made money every quarter since at least April 2009, while the larger wholesale operation has posted losses multiple times during the same period.
Under the leadership of CEO Kentaro Okuda and his predecessor Koji Nagai, Nomura has worked to increase its stable, fee-based assets, like mutual funds. These assets reached a record high of ¥24.3 trillion in June, and Sugiyama is confident they can grow to ¥35 trillion by March 2031.
Despite cutting staff in recent years, Nomura is now focused on raising the skill level of its employees and bringing in new talent. The company has seen a surge in job applications from experienced bankers at other firms.
Sugiyama also mentioned that Nomura is open to acquiring other companies to strengthen its wealth management business, especially as competition in Japan’s retail space intensifies. The company has already exited its loss-making mobile brokerage venture, Line Securities Corp.
The shift from being brokers to becoming wealth managers has taken time, but Sugiyama believes the company has made significant progress. “It’s something that takes 10 years, but things have really improved,” he said.
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