Kenichi Watanabe, the chief executive officer of Japan's biggest investment bank Nomura Holdings, Inc. (NYSE:NMR) (TYO:8604) resigned, taking responsibility of the insider trading scandal that was leaked recently. The firm says that there is possibility of more information leaks than unearthed so far. Watanabe's right hand and chief operating officer of Nomura, Takumi Shibata has also resigned from his post.
Management reshuffle was approved by the company board during a meeting Thursday. Koji Nagai, head of the company's domestic brokerage business will be replacing Watanabe on August 1. Nagai has been working with Nomura since 1981. The chief of Nomura's American arm, Atsushi Yoshikawa will fill in the position of outgoing COO Takumi Shibata.
During today's press conference in Tokyo, Watanabe bowed to apologize and said, “I take this insider issue very seriously.” Regulatory authorities this year found that Nomura employees leaked insider information about energy share offerings to clients of its securities division in 2010. Nomura had appointed a panel of attorneys to investigate the insider trading cases.
The bank said, “There are certain other cases in which there are high possibilities that corporate-related information were communicated by our employees to our clients. We intend to restore the confidence that we have lost in the capital markets.”
Watanabe and Shibata were the key architects in Nomura's acquisition of Lehman's European business for just $2 (Yes! two dollars) and Asian division for $225 million during 2008 economic crisis. Their exit has raised questions over Nomura's international expansion strategy. However, the newly appointed CEO, Koji Nagai said he will create a "new global strategy" to pursue Nomura's ambition of becoming the largest investment bank based in Asia. “We will make bold choices of what we will focus on. We will not simply stick to how we did things in the past,” he said
Investors have responded positively on the resignation of the bank's top two executives. Nomura's share prices jumped 6 percent well before the first quarter earnings were reported today. The bank announced that its first quarter profits declined 89 percent to ¥1.89 billion ($24.2 million) due to fall in brokerage commissions and investment banking fees.