Trim Trauma

Mumbai, April 24: Nomura Holdings — the Tokyo-based investment banking powerhouse that bought Lehman Brothers’ floundering assets in Asia including India — has started laying off people in Mumbai just six months after it had saved them from the dire prospect of pink slips.

Blame it on the downturn and the heavy losses it posted in the fourth quarter.

Nomura has decided to slash 25 per cent of its workforce at its business process outsourcing office in Powai, a suburb in Mumbai.

“At least 400 people have been laid off so far. Over a 100 more will be asked to go soon. We are very tense. Everyday, people come to work expecting pink slips. It is back to square one for us,” said an executive at the Nomura BPO.

Employees at the BPO had lived with the fear of job loss for over a month after Lehman Brothers went bust last September.

Top sources of the bank in India confirmed to The Telegraph that the decision to sack people came at a time when Nomura was expanding its operations in India. The investment banking giant is due to start proprietary trading business in the country.

“This is the first time that Nomura Financial Advisory & Securities (India) Pvt Ltd, a wholly owned arm of Nomura Holdings, is getting into the new business. We have already registered with Sebi as a merchant banker and with the Bombay Stock Exchange and the National Stock Exchange as a stockbroker. We have also applied to the foreign investment promotion board for necessary approvals to expand into proprietary trading business,” the Nomura official said.

This indicates that Nomura plans to actively trade in stocks, bonds, options, commodities, derivatives and other financial instruments with its own money, as opposed to its customers’ money, to make a profit for itself.

“The parent firm is expected to pump money into Nomura Financial Advisory & Securities (India) Pvt Ltd,” said the Nomura source.

Till 2007, Nomura did not figure on the list of top 20 investment banks operating in India.

What is interesting is that Nomura is looking to expand its operations in India after announcing its worst-ever results today.

Burdened with high labour costs, Nomura has also slashed its investment banking team in India by half.

“Out of the 26 people in the investment banking division here 13 — including top officials like Surojit Shome, Ashok Mittal and Prashant Purker — have already been asked to go. The structured finance operations have also been closed down after the eight members manning that desk were shown the door,” said the Nomura source.

On Friday, Nomura Holdings saw its net loss widen to 709 billion yen (about $7.22 billion) for the year ended March 31, as the acquisition costs of Lehman Brothers and writedowns weighed heavily on the company’s bottom line.

Last year, its net loss stood at 67.8 billion yen.

The Japanese entity raked in revenues of 664.51 billion yen, a 58 per cent fall from last year’s level.