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Nomura sets sights on China and India

April 30, 2008 18:56 IST

Nomura, Japan's largest brokerage, is considering mergers and acquisitions in order to build its presence in emerging markets such as China and India , where it needs operating licences.

Kenichi Watanabe, new chief executive, said on Monday that "the market environment is difficult but [we] consider it a major opportunity" to expand in areas where the company lacks competitiveness.

He said Nomura, which last week announced it was putting together a Y300bn ($2.9bn) war chest, was keen to build up its presence in Asia, where it has lagged behind its western competitors, and that mergers and acquisitions would be a quick route to acquiring banking licences in some emerging markets.

Nomura's bullish stance comes amid disappointing results from Japanese brokers in the year just ended. Last week Nomura unveiled a larger than expected net loss of Y67.85bn.

On Monday Mizuho Securities said it had made a net loss of Y418.7bn, due largely to exposure to the US subprime market.

Meanwhile, Nikko Cordial, which was recently acquired by Citigroup, said that it posted a quarterly loss for the first time in five years due to lower trading and commission revenues.

Daiwa Securities, Japan's second-largest securities group, has been battered by the downturn and on Monday posted a 50 per cent drop in net profits to Y46bn, compared with Y93bn previously.

Mr Watanabe said Nomura would increase its investment banking team throughout the Asian region over the next three years from 80 to 130 personnel, focusing on China and India.

It would seek to raise global investment banking revenues during that period to Y120bn, from Y83bn in the year just ended.

Nomura is aiming to increase pre-tax profits from the investment banking division to Y50bn in three years, from Y23bn last year.

Michiyo Nakamoto in Tokyo