(Bloomberg) — Nomura Holdings Inc.’s CEO and other senior managers will take pay cuts as the Japanese investment bank unveiled new corrective measures following allegations of robbery and attempted murder by a former employee.
CEO Kentaro Okuda, who is also president of Nomura’s domestic securities unit, will return 30% of his salary for three months, the company said in a statement on Tuesday. Nine other executives will face similar or smaller reductions, including Go Sugiyama, head of wealth management, according to the statement.
The incident in Hiroshima, western Japan, is one of two scandals that have rocked Nomura lately, tarnishing the company’s reputation at a time when profits are recovering.
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“We would like to deeply apologize to the victims, as well as many other people involved, for the great inconvenience and concerns caused,” Okuda said at a news conference in Tokyo, as he and three other top managers bowed deeply in unison. “We are deeply sorry.”
When asked if there are cultural issues behind the Hiroshima case, Okuda did not rule it out, saying he is taking it seriously. He also said he is not considering resigning.
Prosecutors charged the 29-year-old former employee last month, alleging he drugged an elderly customer and the person’s spouse, stole money and set fire to their home. The couple managed to escape. The suspect was working for Nomura’s wealth management division at the time of the incident in July and was fired.
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Revised standards of conduct
Nomura has announced a series of measures to enable early detection of employee misconduct. These include strengthening supervision of visits to clients’ homes and seeking broader feedback on workers, including from colleagues. The company also promised to improve its recruitment screening process and conduct ethics training.
Last month, the company said it was tightening rules on visits to customers’ homes, with staff needing prior approval to consult with customers.
It is the second time that Okuda has taken a pay cut in recent weeks. In late October, he offered to pay back 20% of his salary for two months after Japan’s financial regulator fined Nomura for manipulating the government bond futures market.
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Clients decided to take their securities underwriting businesses to rivals after the revelations, although some returned to Nomura.
Okuda’s compensation rose 31% to ¥506 million ($3.4 million) in the year ended March, which was a record for a Nomura CEO.
Earlier on Tuesday, Okuda told the company’s annual institutional investor forum that he regretted the Hiroshima incident, while also promising to take corrective action. Some investors at the meeting shrugged off the recent scandals, saying they think things will get better from now on. One of them said that the important thing is to take measures to prevent a recurrence.
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Nomura shares were relatively unscathed during the scandals as buoyant financial markets boosted earnings growth. Shares rose 1.5% on Tuesday, taking this year’s advance to 47%.
Still, it remains to be seen whether the Hiroshima case affects Nomura’s profitable wealth management operations at a time when the Japanese have shown greater willingness to invest their savings.
Consultations with clients in their homes are a common practice in Japan.
The Financial Services Agency asked Nomura to examine the cause of the incident and come up with measures to prevent similar cases, the agency said. Bloomberg last month.
Case in Hiroshima
Nomura said the former employee joined Nomura’s national securities unit as a new graduate in 2018. He provided asset management consultancy to individual and corporate clients in the Hiroshima branch.
On August 2, he told the branch manager that police suspected he had committed arson in connection with a fire at a customer’s home and that he had stolen money from them. Nomura said he learned of the incident through this report and fully cooperated with the police investigation.
The company immediately began contacting the former employee’s customers and began an investigation into other possible incidents, he said. She fired the employee on August 4.
At the briefing, Okuda also said that Chief Financial Officer Takumi Kitamura was likely already aware of the details of the incident at an earnings briefing last month. Kitamura then said he did not know about the suspect’s name or when Nomura fired the man.
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