NOMURA HOLDINGS, INC

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Nomura : Investor Day Kentaro Okuda Group CEO Nomura Holdings, Inc.

05/12/2021 | 03:14am

Investor Day

Kentaro Okuda

Group CEO

Nomura Holdings, Inc.

May 12, 2021

Connecting Markets East & West

© Nomura

Enhancing risk management and business approach following incident in US

  • Exited over 99% of positions (progressed from over 97% as of April 23 and now nearly fully exited)
  • Implementing following initiatives and strengthening organization to support international strategy

Detail of actions (all completed or in progress)

Fact-finding investigation

Taking swift action

  • Related departments conducted wide-ranging investigation of facts; Already implemented a number of preventative measures
  • Audit Committee hired external law firm to conduct comprehensive, impartial review and a number of remedial measures have already been put in place

Responses completed/

being

Check and implemented strengthen

risk

management

framework Responses moving

forward

Leadership

  • We conducted a full review of existing prime brokerage transactions and reviewed positions in other financing-related businesses, confirming no other similar transactions
  • Review of risk management framework centered on Prime Brokerage business
  • Conduct comprehensive review by third-party experts on risk management framework for Wholesale and Risk management
  • Strengthen global risk controls (enhance Risk Management organization, deepen and expand scope of Wholesale risk monitoring conducted by committee comprising CRO/CFO/Head of Wholesale)
  • Appoint new CEO at US subsidiary who has extensive experience in financial services in the US
  • Enhance front office and risk management teams

Phase 1

Initial responses

Phase 2

Review prime brokerage risk

management framework

Phase 3

Comprehensive review of

Wholesale risk

management framework

Phase 4

Enhance global risk

governance

  • Review of transactions with existing prime brokerage clients (review of large clients completed)
  • Reviewed concentrated positions in non risk origination businesses (completed)
  • Enhance monitoring of concentrated positions
  • Revise margin rate table
  • Enhance management of margin rates for individual transactions (approvals, etc.)
  • Comprehensive review of risk management framework (internal review complete, upcoming external review)
  • Enhance Risk Management org.
  • Strengthen functions of committees
    • Expand scope of portfolio testing beyond financing to other Wholesale businesses
  • Promote understanding or subjective risk management among front office teams

Looking ahead

Management

strategy

Robust financial position

for provision of high-

quality services

(Mar 2021)

Continue with management strategy, in particular Wholesale strategy to build out businesses leveraging our global franchise, while enhancing risk management

  • Further enhance our governance structure in line with global business strategy (increase the number of non-Japanese outside directors)
  • Common Equity Tier 1 ratio of 15.7%

(minimum regulatory requirement is 7.51%)

  • Liquidity portfolio of Y5.7trn (13% of total assets)

Strengthening

Strengthened US executive structure

leadership

Future prime brokerage business

  • Prime brokerage is an important client service that supports our overall Equities business including execution, block trades, derivatives and ECM
  • Continue to offer prime brokerage services to support other businesses while enhancing risk management

1

Expanding our scope of business from public to private (1/2)

  • Announced management vision of "Achieving sustainable growth by helping resolve social issues" towards FY2024/25
  • To achieve this, we are taking strategic steps to expand our scope of business from public to private

Leverage our strengths in the public markets to enhance our presence in private markets

1

Private placements

Alternatives

• Private equity

3

• Private debt

Digital

• Project assets

(infrastructure)

Products

Bespoke

Digital bonds, security

token offerings

Non-financial services

services and

Listed products

Current

business

Mainly face-to-face

and public

(centered on

offerings

high touch services

public markets)

Clients

2

New investor base

Mainly individuals,

New needs of existing clients

institutional investors,

listed companies

Startups (unlisted companies)

Provide customized services and solutions privately to each client

2

Expanding our scope of business from public to private (2/2)

  • Continue to strengthen existing businesses with competitive advantage
  • Actively allocate resources to new businesses including private with a view to the future

Private

Retail

WS

IM

New areas not under any specific division

Areas to enter/enhance

Advisory

Aircraft lease

Nomura Greentech

Private equity/debt

for future

Remote financial

consulting services

Domestic wealth management

International

Nomura Agri

wealth management

Planning & Advisory

Search funds

HNWIs and Corporates/owners

Nomura Navigation

Infrastructure and

Boostry

power finance

OTC Derivatives

Private placement

Alliance with Jarden

Nomura SPARX

Security token

offering

Alliance with

Financial intermediaries

Mass affluent

Wealth Square

Level fee

(Alliance with

Wolfe Research

regional banks)

Structured Finance

Sustainable finance

CIO services

Credit

FX/Emerging

Contact center

LINE Securities

Komainu

Equities

ECM/DCM

Corporate transformation

China business

Rates

Public investment

trust

ESG investment

Financial intermediaries

Areas of

ETF

(Platform)

competitive strength

New compared to existing business

3

Looking back on past year

  • Seeing results from business platform rebuild launched two years ago and firmwide cost reduction program
  • In May 2020, announced FY2024/25 management vision, now implementing strategic initiatives to expand our scope of business from public to private

April 2019

May 2020

July 2020

January 2021

April 2021

Investor Day

Investor Day

Lay foundation

to move to

"next stage"

Announced

management vision towards FY2024/25

Expand business from public to private

Established Content Company

  • Set up CIO Group for full-scale entry into high value-added advisory model
  • Alliance with Wolfe Research, a US equity research boutique

Established Investment

Management division

Agreed on a strategic alliance with SPARX Group

  • Establish Nomura SPARX Investment, Inc. a listed investment entity that invests in unlisted companies

Rebuild business platform

Retail

Core business

Channel reformation realignment

Branch office consolidation

initiatives

Wholesale

  • Review of business portfolio
  • Allocate resources to core products

Total cost reductions of Y140bn

Expand business from public to private

Approaches by segment taken hold

Establishment of hybrid model effectively blending face-to-face and non-face-to-face approaches

Improve competitiveness of core products

Build global franchise capable of monetizing favorable market conditions

4

Disclaimer

Nomura Holdings Inc. published this content on 12 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 May 2021 07:13:01 UTC.

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