Bloomberg News

Nomura Said to Reduce Saudi Equity Swap Staff in Cost Cut

March 14, 2013

Nomura Holdings Inc. (8604), the Japanese lender seeking to save $1 billion in costs, is cutting staff at a business that allows foreigners to invest in Saudi Arabia’s equities market, a person familiar with the matter said.

The bank closed out positions in November and two of nine employees at the Riyadh office have been let go, the person said, asking not to be identified as the matter hasn’t been made public. The employees were responsible for offering the so- called total-return swap product, which Japan’s biggest brokerage started in February 2012, the person said. The mechanism allows foreigners to invest in Saudi shares while adhering to restrictions on direct investment by non-Saudis.

Nomura is cutting jobs while competitors such as Morgan Stanley (MS:US) and Credit Suisse Group AG boost their presence to meet investor demand for greater access to the $381 billion stock market. John Burbank, founder of $3.7 billion San Francisco- based hedge fund Passport Capital LLC, said in February that Saudi Arabia is the top emerging market and direct foreign investment in equities may attract as much as $30 billion.

A spokeswoman for Nomura in London, who asked not to be named citing corporate policy, declined to comment.

Paring Costs

Nomura is seeking to pare costs after it bought Lehman Brothers Holdings Inc.’s European and Asian units in 2008. The bank is overhauling its operations to make all overseas businesses profitable by the year ending March 2015, Chief Executive Officer Koji Nagai said in December.

Saudi Arabia, which last year said it will open up the market gradually, only allows non-resident foreigners outside of the six-nation Gulf Cooperation Council (BGCC200) to invest in its listed companies through equity swaps and exchange-traded funds.

HSBC Holdings Plc, the biggest underwriter of bond sales in Saudi Arabia last year, sees the nation’s equity market opening up as early as next year, Simon Cooper, chief executive officer of HSBC’s Middle East business, said yesterday.

The benchmark Tadawul All Share Index (SASEIDX) rose 0.6 percent at the close in Riyadh yesterday, bringing this year’s gain to 3.3 percent. That compares with a decline of 0.7 percent for the MSCI Emerging Markets Index (MXEF) as of 5:19 p.m. in Dubai. Saudi Arabia’s bourse is closed today for the weekend.

To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net

To contact the editors responsible for this story: Claudia Maedler at cmaedler@bloomberg.net; Dale Crofts at dcrofts@bloomberg.net


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