Nomura CEO Watanabe to resign over trading leaks: Nikkei

Wed Jul 25, 2012 3:29pm EDT

(Reuters) - Nomura Holdings Inc (8604.T) CEO Kenichi Watanabe will resign to take responsibility for leaks of insider information to the clients of its brokerage unit, the Nikkei newspaper reported.

A Nomura spokesman in New York declined to comment on the report, which comes a month after the investment bank halved Watanabe's pay for six months in response to its brokerage unit's third insider trading scandal since he took the helm four years ago.

Nomura, due to report results on Thursday, has confirmed it was the source of leaks on planned share offerings by energy firm Inpex (1605.T), Mizuho Financial Group (8411.T) and Tokyo Electric Power (9501.T) in 2010.

In all three cases, employees in its institutional sales department provided the tip-offs.

A panel of attorneys brought in by Nomura to investigate the insider trading cases said it found equity sales staff would regularly pump colleagues for inside information about upcoming share offerings and then share tips with investors.

"When you look at their history, the number of scandals, this was the last straw," said Jim Sinegal, an analyst with Morningstar research house who saw no clear successor.

"If I had to guess I'd say it would be someone already at the top, the COO, maybe, or one of his top lieutenants. Though they need a broad cultural change, right now, I would bet against it being an outsider."

LOST BUSINESS

Nomura, Japan's largest brokerage, is awaiting possible sanctions from Japan's Financial Services Agency but the scandal has already cost it clients.

Some asset managers have stopped trading with the firm to meet their own compliance rules and it has lost underwriting business, including being left off the government's sale of $6 billion worth of Japan Tobacco (2914.T) shares.

Shares of Nomura have almost halved in value since the first insider trading case emerged in March. That compares with a 12 percent fall in the Japanese securities subindex .IFINS.T during the same period.

The bank is expected to report on Thursday that it roughly broke even in the latest quarter but much more interest is likely to be in its future prospects in the wake of the scandal.

NO OBVIOUS SUCCESSOR

A departure by Watanabe would pose fresh issues for the bank given there's no obvious successor.

He joined Nomura in 1975 and took over as CEO four years ago, carving out a reputation for making key decisions on his own.

Chief Operating Officer Takumi Shibata, who helped orchestrate the acquisition of assets from the bankrupt Lehman Brothers during the financial crisis, is not viewed as a strong CEO candidate due to his lack of experience managing the mainstay retail operations.

The purchase of Lehman assets in Asia and Europe -- the latter for just two dollars -- marked Nomura's emergence as a world player in investment banking.

Nomura was the first Japanese securities company to establish an overseas office 81 years ago.

Before acquiring Lehman, it had expanded to 30 countries but still generated more than 90 percent of its revenues in Japan.

(Writing by Rodney Joyce in Bangalore; Editing by Sriraj Kalluvila)

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