Nomura CEO quits

Nomura Holdings Inc CEO Kenichi Watanabe resigned over a widening insider trading scandal and will be rep­laced by company veteran Koji Nagai, as Japan’s top investment bank warned additional cases could come to light.

The management shake-up was con­firmed in a news conference at the end of a dramatic day in Tokyo that also saw Watanabe’s top lieutenant, Takumi Shibata, resign over leaks of insider information to clients of its securities unit in 2010.

Watanabe is the second global bank boss to resign this month — Barclays chief Bob Diamond stood down over the Libor rate-rigging scandal on July 3 — as the industry finds itself under huge political and regulatory pressure.

The departure of Watanabe and Shibata, the architects of Nomura’s takeover of the Asian and European assets of Lehman Brothers, raises questions about the future of the global expansion strategy they pursued.

In an update on its own investigation into the scandal, Nomura said there was a “high possibility” that it leaked inside information on additional share offerings to clients beyond the three cases already unearthed by Japanese regulators.

The resignations of Watanabe and Shibata, Nomura’s chief operating officer, and their replacement by Nagai and Atsushi Yoshikawa, the head of its US operations, would take effect on August 1, the bank said.

Nomura’s shake-up comes a month after the bank cut pay for both of its top executives in response to the third insider trading scandal since Watanabe, who joined the bank in 1975, took the helm four years ago.

Investors reacted positively, bidding Nomura shares up nearly 6 percent ahead of its fiscal first quarter earnings, which saw the bank report a net profit of 1.89 billion yen ($24.2 million), against a profit of 17.7 billion yen in the same period last year. The consensus of eight analysts was for a profit of 500 million yen. Earnings were hit by slumping mutual fund sales and stock trading commissions.

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