Wall Street Woes Forcing Japanese Firms to Cut Back

NEW YORK — The stock market’s torpor continues to slow the major Japanese securities firms’ expansion into the United States.

The latest evidence came from Nomura Securities, which announced late last week that it has cut the staff of its U.S. subsidiary for the second time since the crash of October, 1987.

Nomura, the world’s largest securities firm, said it has cut 30 jobs from its stock trading and sales operations in this country and closed down its money-losing effort to sell U.S. stock to American investors. Among the eliminated jobs are two in Los Angeles and 28 in New York.

Last February, the firm cut 38 people from its U.S. operations; Nomura’s total U.S. staff has fallen 20% to 520 in the past year.

Among other Japanese-based securities firms, Daiwa Securities has cut its U.S. staff by 7% to 355 and Nikko Securities has trimmed its staff through attrition by about 16% to about 310 since the market plunge.

Of the so-called Big Four Japanese firms, only Yamaichi added U.S. staff last year; its U.S. unit grew 12% to about 300, said Scott Pardee, the unit’s vice chairman.

Officials of Nomura’s U.S. unit, Nomura Securities International, said they continue to sell American stock to Japanese and other foreign investors, and they insisted that the reductions do not mean a change in Nomura’s plan to become a full-scale competitor here. While it has cut back U.S. stock operations, Nomura has been expanding in sales of other U.S. investments, such as mortgage-backed securities, they said.

Saw It Coming

“As the profitability of the U.S. equities market turned down so significantly after Black Monday, it has become clear that some of our resources could be better redeployed elsewhere,” Masaaki Kurokawa, chairman of the U.S. subsidiary, said in a statement. He said that despite the efforts of the company’s U.S. staff, it has “simply been impossible to overcome the extraordinary volume and profit drops” in stocks.

One recent departure from Nomura’s equity desk, Jay Ryan, said employees “knew it was coming for some time--and that’s why I got out.” The cutbacks affected only Americans, a fact that stirred some resentment, according to Ryan, who left the firm to join the U.S. securities subsidiary of a British bank, National Westminster.

Nomura, Daiwa, Nikko and Yamaichi are each believed to be losing money on their U.S. equity operations.

Discussing their interests in other areas, Nomura officials noted that in the past 18 months the firm has bought stakes in three U.S. businesses: the Wasserstein, Perella & Co. mergers firm; Eastdil Realty, a real estate investment firm, and Babock & Brown, a leasing concern.

It has also added employees in the financial futures area, although the other Japanese firms may have been more active in that field. Daiwa, for example, has added 19 people in its futures operation in Chicago since August.

“Our increases in the futures area have more than offset the cutbacks in equity trading,” said Paul H. Aron, vice chairman emeritus of Daiwa’s U.S. subsidiary.

U.S. Firms Also Cut Back

An official of an American-based securities firm contended that the Japanese may be hobbling their future efforts to sell stock to American investors by sharply cutting back operations during the current bear market. He noted that the Japanese have said during their expansion that they intended to remain global players.

“They say they’re here to stay, then they pull back,” the executive said. “When the market picks up and they start looking for customers, they may be harder to find.”

But officials of the Japanese firms countered that the staff cuts are hardly more severe than those made by the American firms because of the bear market.