• Bloomberg


Daiwa Securities Group Inc. said Monday it will eliminate as many as 50 derivatives jobs in Hong Kong and may shrink investment banking and equity research in the city as part of an expanded cost-cutting program.

The firm will close its Hong Kong desk for over-the-counter trading of equity, currency and interest-rate derivatives, affecting between 30 and 50 staff, spokeswoman Kana Shirakawa said.

The reductions are in addition to the 500 positions eliminated in Asia and Europe since last October as Daiwa follows bigger rival Nomura Holdings Inc. in expanding cost cuts to cope with losses abroad.

Daiwa, the nation’s second-largest brokerage, has posted pretax losses outside of Japan for 11 straight quarters.

“Additional cost cuts must be unavoidable after Daiwa incurred losses overseas in the fiscal first quarter,” said Azuma Ono, an analyst at Barclays PLC. “Daiwa is seeking to improve the bottom line of its businesses abroad through cutbacks, including job reductions, as competition intensifies in Asia’s investment-banking market.”

The Nikkei financial newspaper had earlier reported the plans and said Daiwa aims to expand its target for cutting costs to ¥70 billion from ¥60 billion.

Chief Executive Officer Takashi Hibino is scaling back abroad as global economic growth slows and Europe’s sovereign debt crisis destabilizes markets. Daiwa Capital Markets Hong Kong Ltd. eliminated 60 positions across departments earlier this year, about 10 percent of the unit’s staff.

Daiwa employed 14,744 people worldwide as of June 30, down 1,151 from a year earlier, according to company data.

The latest reductions won’t affect the personnel that Daiwa gained through its $1 billion purchase of Belgian bank KBC Group’s convertible-bond and Asia equity derivatives units in 2010, Shirakawa said.

Daiwa bought those assets to expand brokering and investment-banking operations globally after ending a decade-long venture with Sumitomo Mitsui Financial Group Inc.

Cost cutting helped Daiwa post net income of ¥2.7 billion in the three months ended June, compared with a loss of ¥9.4 billion a year earlier. The company continued to lose money abroad, reporting a pretax loss of ¥5 billion.

Nomura last month pledged to trim an additional $1 billion in costs as it pares a global push following its 2008 purchase of Lehman Brothers Holdings Inc.’s operations in Europe and Asia. The firm is eliminating about 100 investment banking jobs in Europe, three sources with knowledge of the plans said last week.

Daiwa and Nomura were embroiled in an insider-trading investigation this year. Regulators found that employees at both firms leaked information to traders ahead of share sales they managed in 2010.

In Daiwa’s case, the actions were found to be isolated and the company wasn’t punished. Nomura received an order to improve its business and the company’s top two executives resigned.

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