Nomura Reassesses China Business as Losses Mount in Joint Venture

Nomura Holdings has announced a reassessment of its mainland China business as its Shanghai-based securities joint venture struggles with mounting losses. The majority-owned joint venture, launched in 2019, has faced challenges in expanding, largely due to the impact of the pandemic and a slowing economy in China.

In 2022, the joint venture reported a loss of 225 million yuan (approximately $30.75 million), following a loss of 84 million yuan in 2021, according to Nomura's filings. The joint venture's headcount has also declined from 281 in July to 259, significantly below the original target of increasing it to 500 this year.

While Nomura did not provide an official reason for the decrease in headcount, reports suggest that the joint venture has cut jobs and witnessed several departures following a management reshuffle earlier this year.

Nomura received regulatory approval to launch the joint venture, known as Nomura Orient International Securities, in 2019, as part of China's efforts to open its financial sector to foreign firms. The original plan for the joint venture involved a focus on wealth management initially, with future expansion into wholesale businesses, including investment banking and trading.

In a statement, Nomura said, "With a presence in China for over four decades since 1982, we have consistently sought to contribute to the development of the country’s capital markets and service the evolving needs of clients. That strategy remains unchanged. Having now fully emerged from the pandemic, we are working constructively with our joint venture partners to determine the most viable path for our onshore business to achieve this long-term objective."

This reassessment coincides with reports that Nomura is reducing its investment banking workforce in Hong Kong, with approximately 10 Hong Kong-based bankers having been laid off, including those involved in China-related deals. Leading banks like Goldman Sachs and Citigroup have also undertaken rounds of layoffs this year in their Asia-based investment banking units.

Nomura's joint venture is 51% owned by Nomura, 24.9% by Orient International Holding, and 24.1% by Shanghai Huangpu Investment Holding Group.

By fLEXI tEAM