Nomura Holdings is positioning itself for significant revenue growth in its trading division, forecasting an increase of up to 30% over the next three years. This optimistic outlook is fueled by a strategic push to expand its services for hedge funds and a notable rebound in trading revenues, particularly in government bonds and equities.
Rig Karkhanis, head of Nomura’s global markets division, revealed the bank’s ambitious plans in a recent interview with Reuters. The division, which represents Nomura’s largest revenue stream, has already seen a 15-20% increase in revenue in 2024 compared to the previous year. This growth is attributed to improvements in the rates business in Europe and enhancements in equity execution services and products.
Karkhanis highlighted the turnaround in Nomura’s European rates business, attributing it to a newly-formed team and strategic investments in equities. “A lot of the investments being made in equities, both execution services and equity products, have really kicked in,” he said.
This positive momentum comes as Nomura looks to strengthen its presence in the prime brokerage space—a sector offering services such as financing and trade execution to hedge funds. This move marks a strategic shift following the $2.9 billion loss the bank incurred in 2021 due to the collapse of the Archegos Capital fund. The Archegos debacle, which highlighted significant risk management flaws, led to heightened regulatory scrutiny and increased capital requirements, though these have been somewhat relaxed in the past year.
Under Karkhanis’s leadership since 2023, Nomura has focused on enhancing its risk controls and technology infrastructure. He noted that the bank is seeing substantial interest from clients looking to diversify their prime brokerage relationships. “There’s a big opportunity for us,” Karkhanis said. “What we have found is there is real interest from clients to diversify away from other banks.”
Nomura’s strategy includes leveraging its existing prime brokerage operations in the U.S. and Asia to broaden the range of assets traded by clients. The prime brokerage market, valued at approximately $20 billion annually, has attracted attention from several banks, although the sector remains dominated by established players like JP Morgan, Morgan Stanley, and Goldman Sachs.
Karkhanis emphasized that Nomura’s expansion into prime brokerage is part of a long-term strategy. “It’s a three, five-year plan where we will build steadily and use our balance sheet,” he said, without specifying numerical targets for this initiative.
Despite a significant increase in hiring last year, with 400 new staff members added to the 3,200 employees in the markets division, Nomura has maintained its workforce size, indicating a strategic approach to growth and stability.
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