Nomura
Annual Report 2008

Plain-text annual report

A n n u a l R e p o r t 2 0 0 8 Create Change. World-Class. Speed. A n n u a l R e p o r t 2008for the Year Ended March 31, 2008 FSC certified paper is used for the main body of this annual report. Printed using soy inks. Printed in Japan Profile Nomura is a leading financial services group and the preeminent Asian-based investment bank with worldwide reach. We provide a broad range of innovative solutions tailored to the specific requirements of individual, institutional, corporate, and government clients through an international network in 30 countries. Based in Tokyo and with regional headquarters in Hong Kong, London, and New York, Nomura employs about 18,000 staff worldwide. We are committed to establishing a strong position as a financial services group with world-class competitiveness, and have set a management target of achieving return on equity (ROE) of between 10% and 15% on average over the medium to long term. As we work towards these goals, we remain focused on making a difference for our clients through our five business divisions: Domestic Retail, Global Markets, Global Investment Banking, Global Merchant Banking, and Asset Management. CONTENTS Consolidated Financial Highlights (U.S. GAAP) To Our Shareholders and Customers Features 2 4 14 Instinet Growth Story . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Consulting-Based Marketing of My Story Profit Distribution-Type Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Business Environment Business Outline 18 20 Domestic Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Global Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Global Investment Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Global Merchant Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Asset Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Global Research Corporate Governance and Internal Control System 32 34 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Executive Officers and Business Division CEOs . . . . . . . . . . 39 Corporate Social Responsibility Seven-Year Financial Summary (U.S. GAAP) Major Subsidiaries and Affiliates/ Nomura Securities Domestic Network Corporate and Other Data 40 42 44 46 Forward-Looking Statements This annual report contains forward-looking statements about the future plans, strategies, beliefs, and performance of Nomura Group. These forward-looking statements are not historical facts. They are expectations, estimates, forecasts, and projections based on information currently available to the Company and are subject to a number of risks, uncertainties, and assumptions, which, without limitation, include market trends, economic trends, competition in the Japanese financial industry, laws and regulations, and the tax system. As such, actual results may dif- fer materially from those projected. Annual Report 2008 1 Consolidated Financial Highlights (U.S. GAAP) For the fiscal years beginning April 1 and ending March 31 of the following year Note: These consolidated financial highlights are prepared solely for convenience. Readers are recommended to refer to the Form 20-F. FY 3/2004 3/2005 3/2006 3/2007 3/2008 3/2008 Millions of yen Millions of *1 U.S. dollars Operating Results: Revenue ¥ 1,045,936 ¥ 1,126,237 ¥ 1,792,840 ¥ 2,049,101 ¥ 1,593,722 $ 15,961 Net revenue Income (loss) before income taxes*2 Net income (loss) 803,103 282,676 172,329 799,190 204,835 94,732 1,145,650 1,091,101 787,257 545,013 304,328 321,758 175,828 (64,588) (67,847) 7,884 (647) (679) Balance Sheet Data (Period End): Total assets Shareholders’ equity ¥29,752,966 ¥34,488,853 ¥35,026,035 ¥35,873,374 ¥26,298,798 $263,383 1,785,688 1,868,429 2,063,327 2,185,919 1,988,124 19,911 Return on equity (ROE)*3 10.1% 5.2% 15.5% 8.3% (3.3)% Per Share Data: Net income (loss)—basic Shareholders’ equity*4 Cash dividends*4 Cash Dividends: Total annual dividends Share buybacks*5 Yen U.S. dollars *1 ¥ 88.82 ¥ 48.80 ¥ 159.02 ¥ 92.25 ¥ (35.55) $ (0.36) 919.67 15.00 962.48 20.00 1,083.19 1,146.23 1,042.60 48.00 44.00 34.00 10.44 0.34 Millions of yen Millions of *1 U.S. dollars ¥29,137 ¥38,845 3,624 — ¥91,487 49,335 ¥83,939 ¥64,921 — 2,520 $650 25 Stock Price: Stock price as of the end of March (Tokyo Stock Exchange) ¥1,895 ¥1,500 ¥2,625 ¥2,455 ¥1,490 $14.92 *1 Calculated using the yen-dollar exchange rate of U.S.$1.00=¥99.85, the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Yen U.S. dollars *1 Reserve Bank of New York on March 31, 2008. *2 Total for continuing and discontinued operations for the fiscal year ended March 31, 2006. *3 Calculation method: Net income (loss) divided by average shareholders’ equity. *4 Calculated using the number of shares outstanding at year-end. *5 Excludes purchases of shares less than one trading unit. 2 Nomura Holdings, Inc. Net revenue & income (loss) before income taxes*2 Net revenue Income (loss) before income taxes (Billions of yen) 1,200 Net income (loss) & ROE*3 Net income (loss) (lhs) ROE (rhs) (Billions of yen) 400 1,000 800 600 400 200 0 -200 FY 3/04 3/05 3/06 3/07 3/08 300 200 100 0 -100 FY 3/04 3/05 3/06 3/07 3/08 (%) 40 30 20 10 0 -10 Total assets (Trillions of yen) 40 30 20 10 0 3/04 3/05 3/06 3/07 3/08 Total annual dividends & share buybacks*5 Total annual dividends Share buybacks (Billions of yen) 100 80 60 40 20 0 FY 3/04 3/05 3/06 3/07 3/08 C o n s o l i d a t e d F i n a n c i a l i H g h l i g h t s ( U . S . G A A P ) Annual Report 2008 3 To Our Shareholders and Customers Kenichi Watanabe President & CEO Create Change. World We are shifting strategic direction to become a creating change in the capital markets, we aim and in turn create opportunities for growth at 4 Nomura Holdings, Inc. T o O u r S h a r e h o l d e r s a n d C u s t o m e r s Takumi Shibata Deputy President & COO -Class. Speed. more client-driven, business-focused firm. By to further the development of the overall market Nomura. Annual Report 2008 5 To Our Shareholders and Customers Fiscal 2007 in Review Summary of results for fiscal 2007 During the fourth quarter of fiscal 2007, ended March 31, 2008, we acted with speed to implement specific measures aimed at minimizing future losses in our credit instrument related activities as the business environment continued to deteriorate due to turmoil in the global credit markets. As a result of these moves, we reported a loss before income taxes of ¥64.6 billion and a net loss of ¥67.8 billion for the year under review. Despite the losses, the impact on our strong financial position was marginal and we maintain some ¥1,988.1 billion in shareholders’ equity. We also moved quickly and decisively to reduce our balance sheet in response to the deteriorat- ing environment. We reduced overseas repo transactions, exited the U.S. resi- dential mortgage-backed securities (RMBS) related business, and reduced our exposure related to U.S. commercial mortgage-backed securities (CMBS). Dividends We declared an annual cash dividend for fiscal 2007 of ¥34 per share. Our tar- get dividend for the current fiscal year, ending March 31, 2009, is ¥34 per share. Once we have achieved a sufficient level of profit, the year-end cash divi- dend will be increased, taking into consideration a payout ratio of over 30%. New Management Structure We are shifting strategic direction to become a more client-driven, business- focused firm. By creating change in the capital markets, we aim to further the development of the overall market and in turn create opportunities for growth at Nomura. Management vision Our management vision centers on three areas: (1) aim to become a financial services group with world-class competitiveness, (2) create change to con- tribute to the development of capital markets and generate growth opportuni- ties, and (3) act as a bridge between Asia including Japan and Europe and the United States. To realize our vision, we aim to create change, be world-class, and act with speed. 6 Nomura Holdings, Inc. Top-down decision making by the CEO, COO, and five business division CEOs We have set up a Group Management Committee, which includes the Chief Executive Officer (CEO), the Chief Operating Officer (COO), the CEOs of the five business divisions, and the Head of Regional Management, Europe, who is based in London. We have adopted this structure to facilitate prompt top-down decision making to deal with rapid changes in the operating environment. The CEOs of the business divisions are now expected to fulfill their duties as the leaders of their divisions while also thinking about the management of Nomura Group as a whole. T o O u r S h a r e h o l d e r s a n d C u s t o m e r s Top management directly engaged in risk management We have also formed a Risk Management Committee and Risk Management Sub Committee, making it possible for top management to become directly engaged in risk management. We will now work to change our risk management structure from one that focuses mainly on trying to measure risk to one that is geared to anticipate risks. Our previous risk management focused mainly on ascertaining the current state of illiquid positions. Now, as previously liquid positions are becoming illiquid, the Risk Management Sub Committee will closely monitor all positions. Reaffirmation of matrix management We have adopted a matrix management approach, under which our businesses are run jointly by regional managers in Europe, the United States, and Asia and the CEOs of the five business divisions. This approach relies on open communi- cation among the regional heads and divisional CEOs, complementary relation- ships, and mutual checking functions. New Management Structure CEO COO Group Management Committee Risk Management Committee Five Business Division CEOs Risk Management Sub Committee Domestic Retail Global Markets Global Investment Banking Global Merchant Banking Asset Management Annual Report 2008 7 To Our Shareholders and Customers Dealing with Credit Market Turmoil We have taken the following steps in response to the recent turmoil in the global credit markets. Reduced balance sheet, increased shareholders’ equity and long-term debt ratios We have reduced overseas repo transactions and taken other measures to reduce the size of our balance sheet. As a result, our total assets declined from about ¥36 trillion as of March 31, 2007, to approximately ¥26 trillion as of March 31, 2008. Reflecting cutbacks in balance sheet items, the ratio of shareholders’ equity to total assets rose from 6.1% to 7.6% over the same period. In addition, we have increased the ratio of long-term borrowings to total liabilities. Reduced B/S; Increased Shareholders’ Equity Ratio and Long-term Debt Ratio Total assets (lhs) Long-term debt ratio (rhs)* Shareholders’ equity ratio (rhs)** (Trillions of yen) 40 30 20 10 0 (%) 40 30 20 10 0 3/2007 3/2008 *Long-term debt ratio = (long-term borrowings/total liabilities) x 100. **Shareholders’ equity ratio = (total shareholders’ equity/total assets) x 100. Credit Ratings* S&P Moody’s R&I JCR *As of June 30, 2008. Nomura Holdings Long-term Short-term A- A3 AA- AA A-2 — a-1+ — Nomura Securities Long-term A A2 AA- AA Short-term A-1 P-1 a-1+ — Immediately following the announcement of our results for fiscal 2007, Standard & Poor’s (S&P), Moody’s Investors Service, Rating and Investment Information (R&I), and Japan Credit Rating Agency (JCR) reconfirmed their ratings and out- looks for Nomura Holdings and Nomura Securities. 8 Nomura Holdings, Inc. Exited U.S. RMBS-related business, increased provisions for exposure to monoline insurers We also moved decisively in response to the direct effects on our position due to turmoil in the global financial markets arising from the subprime loan problems in the United States. We exited the U.S. RMBS-related business and we have reduced the exposure in our U.S. CMBS-related business to ¥130 billion as of March 31, 2008. We have also made full provisions, as of March 31, 2008, for our exposure to lower-rated monoline insurers to prevent future losses. Even after the beginning of fiscal 2008, the environment surrounding the monoline insurers continues to be uncertain. We are, therefore, continuing to keep a close watch on the finan- cial standing of these insurers and will respond flexibly as needed. T o O u r S h a r e h o l d e r s a n d C u s t o m e r s U.S. Mortgage Finance Business Related Exposure OU.S. RMBS-related OU.S. CMBS-related (Billions of yen) 300 (Billions of yen) 300 250 200 150 100 50 0 250 200 150 100 50 0 Exit 6/2007 9/2007 12/2007 3/2008 6/2007 9/2007 12/2007 3/2008 Capital Policy for Growth In times of turbulence in the business environment, we must look for opportunities to expand and grow over the medium to long term. In that sense, we have been presented with an unprecedented opportunity to catch up with our foreign rivals. Raising subordinated debt for efficient use of capital, positioning financial standing for future growth To move with speed and make investments for future growth, we issued ¥120 billion in subordinated bonds in March 2008. We also made arrangements with Annual Report 2008 9 To Our Shareholders and Customers a number of leading financial institutions to borrow subordinated loans. As of July 31, 2008, we had raised a total of approximately ¥600 billion from subordi- nated loans and subordinated bonds. Another objective of raising the subordinated debt is to improve our capital structure, which is currently dominated by shareholders’ equity. As such, we are revising our capital structure by increasing the ratio of subordinated debt in order to increase capital efficiency. Capital Policy for Growth Raised approximately ¥600 billion through subordinated bonds and subordinated loans Subordinated debt Shareholders’ equity Raising subordinated debt to increase capital efficiency Laying foundation for proactive investment aimed at future growth Solid Client Base in Japan Nomura’s Domestic Client Assets Our Domestic Client Assets* account for about 30% of the equities, investment 29.8% Domestic Client Assets ¥72.2 trillion Investment-Related Assets ¥242 trillion (Japan) trusts, bonds, and other investment-related asset portion of Japan’s ¥1,500 trillion in personal financial assets. In addition, we have close relations with corporates and institutions, acting as underwriter for over 60% of listed companies in Japan. Global Markets has long-standing relationships with institutional investors devel- oped through our equities and fixed income businesses. These relations with a As of March 31, 2008 Source: Nomura, based on Bank of Japan data. Figures are preliminary. broad base of clients are invaluable to our operations. Our ability to provide these clients with world-class products and services will underpin our future growth. To that end, we must take a cross-divisional approach to identify the changing needs of our clients and focus more on deliver- ing services that tap the strengths of the entire Group. *Domestic Client Assets: Total of client assets in custody in Domestic Retail (including regional financial institutions) and Financial Management Division. 10 Nomura Holdings, Inc. T o O u r S h a r e h o l d e r s a n d C u s t o m e r s Medium-term Targets ROE of 10%–15%, Revenue Capable of Generating Pretax Income of ¥500 billion Our management target of ROE of between 10% and 15% over the medium to long term remains unchanged. Although the turmoil in the global financial markets continues, we are looking to build a revenue base capable of generating ¥200–¥250 billion in pretax income. We are also aiming to have a revenue structure in place that will allow us to book ¥500 billion in pretax income in three years. Major changes in the environment and competitive conditions in financial markets are expected to continue. We intend to anticipate these changes and respond accordingly to achieve further growth. Acting with speed does not mean that we will make rash decisions. We will take a logical and flexible approach to decision making. Even regarding past decisions, we will make necessary changes in line with the prevailing operating environment and competitive conditions to be better positioned to build a rev- enue base geared towards future growth. The job of the new management team is to ensure stable revenue and respond to market changes by leveraging Nomura’s strengths to generate addi- tional profits. (Billions of yen) 600 500 400 300 200 100 0 -300 FY ¥122.3 bn ¥53.3 bn ¥(226.2) bn 3/2008 Domestic Retail World-class investment services Trusted partner Global Markets Product center of excellence: Delivering sophisticated services to retail and wholesale clients Global Investment Banking Asia’s preeminent investment bank Engine to drive Nomura Group revenue expansion ¥165.0 bn ¥200.0 bn ¥22.8 bn ¥31.0 bn ¥50.0 bn ¥35.0 bn ¥55.0 bn Global Merchant Banking Leading presence in private equity Asset Management World-class player with strong investment capabilities in Japan and Asia Annual Report 2008 11 To Our Shareholders and Customers International Strategy Expanding international business with global platform based in London and Tokyo Our international strategy is another key to growth. Together with Japan, our operations in London are a cornerstone of our global strategy based on exten- sive expertise and experience gained through developing products and servic- es. In the United States, we have nearly finished our downsizing. However, as the United States is a leading financial center, it will remain an essential part of our operations and we will monitor the environment and add on functions as necessary. Our acquisition of Instinet and capital participation in Fortress Investment Group are examples of our strategy to not limit ourselves to organic growth if there are functions that we need and the industry-leading expertise is available. Making strategic moves in Asia and emerging markets We will invest aggressively in markets with prospects for future growth. Emerging markets such as Central and Eastern Europe, the Commonwealth of Kenichi Watanabe, President & Chief Executive Officer Hitoshi Tada, Chief Executive Officer, Domestic Retail Akira Maruyama, Chief Executive Officer, Global Markets Hiromi Yamaji, Chief Executive Officer, Global Investment Banking 12 Nomura Holdings, Inc. Independent States (CIS), the Middle East, China, and India are not only recipi- ents of foreign investment but also investors in their own right. Therefore, demand for financial services going both ways is increasing significantly. In addi- tion to our client base in Japan, we are looking to increase services for Asia and other emerging markets by fully leveraging our capabilities to supply products from Japan and London. Into fiscal 2008, concerns about the emergence of global inflation and an economic downturn have risen, and the uncertainties in the environment sur- rounding financial and capital markets continue to be challenging. Nevertheless, we have a strong financial position, and we believe major business opportunities are unfolding around us. It is time for us to augment our position, look to the future, and steer the firm toward future growth. We look forward to your contin- ued support. T o O u r S h a r e h o l d e r s a n d C u s t o m e r s August 2008 Kenichi Watanabe President & CEO Takumi Shibata, Deputy President & Chief Operating Officer Shoichi Nagamatsu, Chief Executive Officer, Global Merchant Banking Atsushi Yoshikawa, Chief Executive Officer, Asset Management Yugo Ishida, Head of Regional Management, Europe Annual Report 2008 13 Feature 1 Instinet Growth Story Nomura Holdings acquired Instinet in February 2007. Instinet provides institutional investors with the necessary trading tools, alternative trading system (ATS) platforms, and global agency liquidity to achieve high-quality trade execution. With the ongoing global trend toward best execution, Instinet is well-placed to capitalize on new business opportunities. Nomura seeks to achieve further growth by making full use of Instinet’s cutting-edge technology platform, specialized knowledge base, and exten- sive experience. Optimal Solutions for Institutional Investors The demand for equity trading execution services is rapidly (MiFID) in the European Union in November 2007, brokers expanding globally, driven largely by technological advances are now required by law to obtain best execution for their in the available trading tools. clients. These developments are spreading to Japan and the In the United States, institutional investors placing large rest of Asia and are pushing up demand for cutting-edge orders seek to avoid causing major fluctuations in equity trade execution services. prices as a consequence of their trading activities. The unbundling of research and execution has led to an Increasingly, these investors are breaking their trades into increase in the number of clients who select brokers purely smaller lots and requesting that their trades be executed in on the basis of their execution capabilities. As such, Nomura markets that offer the best prices. In addition, as a result of recognized the need for a global order platform and the tightening of restrictions by the U.K. Financial Services enhanced execution capabilities. By acquiring Instinet, we Authority (FSA) in March 2005, securities firms are increas- were able to blend our high-quality research with a solid plat- ingly unbundling research and execution services and quot- form to deliver optimal solutions for order execution to meet ing the costs of these services separately. Moreover, with the demanding needs of investors. the advent of the Markets in Financial Instruments Directive Business: Leading agency broker, providing electronic trading services to institutional investors Services: Electronic trading based on 14 Nomura Holdings, Inc. Regulatory Changes in Europe and the United States United States: Regulation NMS EU: Markets in Financial Instruments Directive (MiFID) Client Order Flow Investor Needs Shift from the concentration of client order flows on stock excha nges t o alte rna tiv e trad ing systems, resulting in the dispersal of trading into a range of markets Inv est ors demand the best tech nol ogy and platform s to achiev e the best execut ion of trades. Execution Capabilities Instinet offers an execution platform capable of accessing more than 80 securities markets in over 40 countries and provides cutting-edge execution technologies (algorithmic trading, transaction cost analysis (TCA), etc.). Collaboration Execution Experts™ Newport™ SmartRouter™ Access to Liquidity Instinet CBX™ Chi-X® JapanCrossing™ KoreaCross™ F e a t u r e 1 Revenue Expansion Recently, as world stock markets fluctuated sharply due to meanwhile, set new records. In the United States also, orders turmoil in the financial markets, the increased volume of from hedge funds investing globally increased, and Instinet transactions led to an expansion in revenue at Instinet. In all steadily expanded its market share of transactions and geographic regions, trading agreements from all client seg- reported new records for transactions on a volume basis. ments, especially orders from hedge funds, showed signifi- cant expansion. Trading on a value basis in Europe and Asia, Chi-X In March 2007, Chi-X Europe, a subsidiary of Instinet, com- Chi-X Europe’s Average Daily Single-Sided Trading Volume menced operation as a multilateral trading facility (MTF). Following the implementation of MiFID in the European Union, rules requiring brokers to route client orders through public exchanges were abolished. As a result, Chi-X Europe has seen a surge in order flow as investors seek to gain the benefits of its superior execution capabilities, including exe- cution speeds and messaging capacities significantly greater than those of European exchanges, and at prices that are up to one-tenth the cost. By April 2008, Chi-X Europe’s execut- ed volume regularly exceeded 10% of the total FTSE 100 volume. By having its systems ready before the implementa- tion of MiFID, Chi-X Europe has been able to reap the bene- fits as a pioneering MTF. Chi-X Europe will continue to increase its coverage, which currently includes component stocks of German, Dutch, British, French, Swiss, Scandinavian, and Belgian indices. (Millions of euros) 2,000 1,600 1,200 800 400 0 2007 Mar. Apr. May Jun. Jul. Aug. Sept. Oct. Nov. Dec. 2008 Jan. Feb. Mar. Apr. a sophisticated technology platform, including algorithmic trading and global portfolio trading systems Annual Report 2008 15 Feature 2 Consulting-Based Marketing of T he My Story Profit Distribution-Type Fund is the largest equity fund marketed by Nomura Securities, with net assets of approximately ¥1,800 billion as of March 31, 2008. This fund was developed based on feed- back from our customers, who find themselves in the midst of a tough investment environment characterized by low savings deposit interest rates, the removal of blanket government guarantees on bank deposits, uncertainty about Japan’s pension fund system, and concerns about inflation. We developed the My Story Profit Distribution-Type Fund in response to customer requests for a diversified fund that invests in a range of asset types. This fund has won the trust of a broad range of customers because of its management philos- ophy of aiming for long-term stable performance and periodic distributions. My Story Profit Distribution-Type Fund in Profile This fund is based on the concept of providing asset man- agement support to customers and was created with the idea that it would be a core investment in customer portfo- lios, offering them a long-term investment they can hold for many years. Since the fund pays regular distributions every other month, it provides retirees with a supplement to their govern- ment pension payments, which are paid in the even months of the year. This bimonthly distribution feature was designed into the fund to appeal to members of the baby-boom gen- eration, who have recently been retiring in large numbers. The fund is designed to respond to the needs of mature, retired investors, and it draws on the services of a number of fund management companies and invests in a balanced portfolio of bonds and stocks. It is thus stable in the face of fluctuations in the economy, and aims to offer the benefits of regular distributions along with capital gains. Moreover, as the fund is designed as a fund of funds, it is able to diversify its holdings by investment style and by investment manager, in addition to achieving asset diversifi- cation. Another distinguishing feature of the fund is that since the features of the funds it invests in may evolve over time, managers continually monitor the funds they have invested in and reshuffle their portfolios as deemed appropriate. My Story Net Assets* (Month-End Balances) My Story Profit Distribution-Type Fund (Six times per year) My Story Stock VA My Story Stock DC My Story Stock 25, Stock 50, Stock 75, Stock 100, and Japan Stock 100 (Billions of yen) 2,500 2,000 1,500 1,000 500 0 2001 2002 2003 2004 2005 2006 2007 2008 *Balances also include net amounts of funds sold by companies other than Nomura Securities. 16 Nomura Holdings, Inc. My Story Profit Distribution-Type Fund Marketing Based on In-depth Consulting Nomura Securities has increased the balance of funds invested in its My Story Profit Distribution-Type Fund by pro- viding customers with in-depth consulting to meet their financial needs. Nomura Securities offers a consulting ser- vice entitled Nomura Asset Design that enables customers to receive advice from Nomura consultants. Based on specific information obtained in conversation with customers regard- ing their objectives, events that seem likely to occur in the future, and risk-return profile, Nomura consultants are able to assist customers in addressing their concerns about the future and propose specific financial plans. This capability to offer consulting-based marketing is one of Nomura’s key strengths. Sales of the My Story Profit Distribution-Type Fund were relatively slow at first, as most retail investors were not famil- iar with fund of funds. However, we were able to familiarize customers with the product through proactive communica- tion, and many began to shift funds such as maturing time deposits into the My Story Profit Distribution-Type Fund. Satisfied customers also introduced other potential cus- tomers, and net assets have expanded substantially. F e a t u r e 2 Financial plan proposals for customers Annual Report 2008 17 Business Environment Winning Client Trust, Pursuing Growth in Changing Personal Financial Assets P Individuals are diversifying their portfolios to include more risk assets because of such factors as low savings rates, continuing uncertainty regarding Japan’s pension system, and the removal of the government’s blanket guarantees on savings deposits. Japan (Economic Trough) March 31, 2003: ¥1,356 trillion Japan (Present) March 31, 2008: ¥1,490 trillion Equities: Bonds: 5.3% 1.7% Investment trusts: 2.1% Total risk assets: 9.1% Cash and deposits: 56.5% Insurance and annuities: 27.8% Insurance and annuities: 27.0% Equities: Bonds: 9.3% 2.7% Investment trusts: 4.2% Total risk assets: 16.3% Cash and deposits: 52.0% Source: Nomura, based on data issued by the Bank of Japan and the U.S. Federal Reserve Bank. Figures for March 31, 2008, are preliminary. Equity Capital Markets Bookrunner League Table—Japan Equity & Equity-Related M&A Financial Advisors Proceeds (Total, lhs) Nomura’s share (rhs) (Billions of U.S. dollars) 60 50 40 30 20 10 0 FY 3/1999 3/2000 3/2001 3/2002 3/2003 3/2004 3/2005 3/2006 3/2007 3/2008 (%) 60 50 40 30 20 10 0 Rank value (Total) Nomura’s ranking (Billions of U.S. dollars) 250 6th 5th 10th 200 150 100 50 0 FY 3/1999 3/2000 3/2001 Source: Thomson Reuters. Source: Thomson Reuters. 18 Nomura Holdings, Inc. Business Environment P The percentage of risk assets in personal financial assets is much lower in Japan than in the United States. United States March 31, 2008: $44.1 trillion Equities: Bonds: 29.1% 8.8% Investment trusts: 14.1% Total risk assets: 52.0% Cash and deposits: 13.9% Insurance and annuities: 30.3% Japanese Market for Publicly Offered Stock Investment Trusts Net assets (lhs) Nomura’s share* (rhs) (Trillions of yen) 80 60 40 20 0 3/2003 3/2004 3/2005 3/2006 3/2007 3/2008 *Nomura Asset Management. Source: The Investment Trusts Association, Japan. B u s i n e s s E n v i r o n m e n t (%) 40 30 20 10 0 League Table—Any Japanese Involvement Announced Ratio of M&A to Nominal GDP 4 th 2nd 3rd 1st 1st 3rd 1st Japan United Kingdom France United States Canada Australia (%) 25 20 15 10 5 0 3/2002 3/2003 3/2004 3/2005 3/2006 3/2007 3/2008 2001 2002 2003 2004 2005 2006 2007 Source: Nomura, based on data issued by the International Monetary Fund (IMF) and Thomson Reuters. Annual Report 2008 19 Business Outline Domestic Retail Offers consulting services and financial products to (Billions of yen) 500 Net revenue Income (loss) before income taxes meet investment needs FY2007 p Net revenue ¥402.0 billion (-8.7% YoY) p Income before income taxes ¥122.3 billion (-24.0% YoY) Global Markets Handles origination, sales, and trading of bonds, equities, foreign exchange, and derivatives for insti- tutional investors in Japan and international markets FY2007 p Net revenue ¥95.6 billion (-67.0% YoY) p Loss before income taxes ¥226.2 billion 400 300 200 100 0 FY 3/2004 3/2005 3/2006 3/2007 3/2008 (Billions of yen) 400 300 200 100 0 -100 -200 -300 FY 3/2004 3/2005 3/2006 3/2007 3/2008 Global Investment Banking Underwrites bond and equity issues, provides M&A (Billions of yen) 100 and financial advisory services FY2007 p Net revenue ¥83.1 billion (-16.2% YoY) p Income before income taxes ¥22.8 billion (-48.7% YoY) Global Merchant Banking Uses Nomura’s own capital to make private equity investments and investments in venture companies FY2007 p Net revenue ¥64.8 billion (-0.3% YoY) p Income before income taxes ¥53.3 billion (+1.0% YoY) Asset Management Delivers a diverse lineup of investment trusts and asset management services as well as administra- tive services for defined contribution pension plans FY2007 p Net revenue ¥90.6 billion (+0.6% YoY) p Income before income taxes ¥31.0 billion (-15.0% YoY) 80 60 40 20 0 FY 3/2004 3/2005 3/2006 3/2007 3/2008 (Billions of yen) 80 60 40 20 0 -20 FY 3/2004 3/2005 3/2006 3/2007 3/2008 (Billions of yen) 100 80 60 40 20 0 FY 3/2004 3/2005 3/2006 3/2007 3/2008 20 Nomura Holdings, Inc. Customer Base Continues to Expand Steadily The overall market slump triggered by turmoil in the global financial markets led to a decline in brokerage commissions; however, the distribution of newly launched investment trusts was robust, especially for bond investment trusts, and com- missions for the distribution of investment trusts remained at the same level as last year. Sales of structured bonds declined as a result of the rapid rise of the yen, leading to lower sales credit. However, sales of foreign currency bonds were strong in the second half of the year. Although Domestic Client Assets* declined by ¥13 trillion from the prior year, to ¥72.2 trillion, due to the impact of the downturn in the stock market, our client base steadily expanded, with net asset inflow of ¥4.9 trillion and an increase of 213,000 accounts with balance, to a total of 4.165 million accounts. *Domestic Client Assets = Total of client assets in custody in Domestic Retail (including regional financial institutions) and Financial Management Division. Credit Market Turmoil Led to Loss The environment in Fixed Income remained harsh, as a global credit crunch sparked by subprime problems hit and the yen appreciated sharply. Amid this environment, Fixed Income revenue declined as a result of significantly increased provisions made for transactions with monoline insurers, a realized loss booked on our exit from the U.S. residential mortgage-backed securities (RMBS) related business, and a realized and unrealized loss in the U.S. commercial mortgage-backed securities (CMBS) related business. In Equity, although trading revenue from multiple private offerings (MPOs) and equity derivatives declined, revenue increased thanks to the contribution from Instinet, which was acquired in February 2007, expanded order flow for non-Japanese equities, and trading of listed equities. Meanwhile, expenses increased due to a rise in commissions and floor brokerage as a result of higher revenue at Instinet. B u s i n e s s O u t l i n e Ranked First in League Tables for “Japan Equity & Equity-Related” and “Any Japanese Involvement Announced” While the mergers and acquisitions (M&A)-related business remained strong and we maintained our high market share, revenue decreased due to a marked decline in overall transaction value in the equity finance market. In equity financing, we acted as lead manager on major deals for Sony Financial Holdings and Yamada Denki, and ranked No. 1 in the “Japan Equity & Equity-Related” league table* for the seventh straight year in fiscal 2007. In M&A, we acted as financial advisor on All Nippon Airways’ sale of its hotel business and the tender offer by Promise to acquire all shares in Sanyo Shinpan Finance. We topped the fiscal 2007 “Any Japanese Involvement Announced” league table*. Internationally, we were global coordinator on Russia’s largest-ever initial public offering (IPO), for PIK Group, a major Russian residential property developer. *Source: Thomson Reuters. New Private Equity Investments and Exits Proceeding Smoothly We booked realized and unrealized gains on the sale of Deutsche Annington and valuation at fair value of Annington in the United Kingdom, both investee companies of Terra Firma*, as well as on the sale of our stake in Nomura Principal Finance investee companies Sliontec and Wanbishi Archives. *Terra Firma is an independent private equity firm based in Europe. Robust Sales of Newly Launched Funds Assets under management grew on the back of firm sales of newly launched funds, such as the Nomura New Global High Interest Rate Currencies Fund, and existing balanced funds, such as the My Story Profit Distribution-Type Course B Fund, as well as new mandates in the domestic and overseas investment advisory business. However, deteriorating market con- ditions due to the slump in stock prices and appreciation of the yen led to a ¥1.2 trillion decline in the outstanding balance of assets under management from the prior year, to ¥25.8 trillion. Although asset management fees increased, unrealized losses were booked on pilot funds* and seed money** for new product development and revenue was flat compared to the prior year, which included realized gains booked on sales of affiliated companies. Compensation and benefits were up due to increased headcount, and information technology expenses increased due to new investment. *Funding for product development. **Funding used to originate funds when launching new products. Annual Report 2008 21 D o m e s t i c R e t a i l World-Class Investment Services, Trusted Business Environment Increasingly Sophisticated and Diverse Investor Needs, Heightened Competitive Environment Becoming World-Class Amid this environment, we are further developing our invest- ment services and products to ensure we continue to meet As a result of continued low interest rates in Japan and uncer- world-class standards. At the same time, we aim to be a trust- tainties regarding the pension system, individuals are continuing ed partner of our customers and have set the goal of increasing to shift their financial assets from savings to investment prod- Domestic Client Assets, which are a measure of the confidence ucts. In view of the interest rate differentials between Japan and that customers have in Nomura, to ¥110 trillion over the next overseas financial markets as well as the retirement of Japan’s three years. baby boomers, which started in earnest last year, this trend toward investment products is expected to continue in the medium to long term. Providing Higher-Quality Products and Services Improving Efficiency, Increasing Customer Consultations Customers who have diversified their portfolios are looking To make more time for consultations with our customers, we for investment products and services tailored to their individual are taking significant steps to increase the efficiency of opera- needs, and investors’ requirements are becoming more sophis- tions at our branch offices. These initiatives have included ticated and diverse. Moreover, as the megabanks and foreign switching our ATMs to Seven Bank, eliminating the handling of financial institutions increase their presence in growth sectors in cash, concentrating back-office functions, and delivering docu- Japan’s financial markets, competition is intensifying, and finan- ments electronically. In addition, by increasing the number of cial institutions must offer higher-quality products and services customer inquiries handled by call centers, we are improving as well as improved consulting services to meet customer responsiveness and increasing efficiency, making it possible needs. to spend more time in face-to-face consultations with our customers. Domestic Client Assets—Net Asset Inflow* Domestic Client Assets and Accounts with Balance (Trillions of yen) 8 Domestic Client Assets (lhs) Accounts with balance (rhs) (Trillions of yen) 100 (Millions) 5 6 4 2 0 FY 80 60 40 20 0 4 3 2 1 0 3/2003 3/2004 3/2005 3/2006 3/2007 3/2008 3/2003 3/2004 3/2005 3/2006 3/2007 3/2008 *Excludes portion from regional financial institutions. Net asset inflow = asset inflow - asset outflow. Note: Domestic Client Assets = Total of client assets in custody in Domestic Retail (including regional financial institutions) and Financial Management Division. 22 Nomura Holdings, Inc. Partner Hitoshi Tada, Chief Executive Officer, Domestic Retail A Wider Variety of Products and Services Nagoya, and Osaka, where there is a high concentration of We have adopted an open-architecture strategy for products financial assets. We will continue to open new branches that and created a structure that makes it possible to offer the best focus on providing services to meet the needs of specific products to meet a wide range of customer needs and market regions, such as Nomura Cube consultation booths* and conditions. branches without back-office functions. Also, by opening more In addition to our Nomura Fund Wrap management account, online outlets we will be able to approach customers that we which requires a minimum balance of ¥10 million, we have have not reached sufficiently in the past, such as asset builders. added a Value Program, which offers fund management for amounts starting at ¥5 million. This new account helps cus- tomers reach their financial objectives by making use of cost- efficient index fund management. We will continue to focus on providing investment consulting and fund management services for a broader base of investors. To give our customers more freedom in terms of cash man- agement, we offer loans using stock holdings and other securi- ties as collateral. A Broader Interface with Clients Increasing Number of Branch Offices Offering Different Functions and Services, Improving Quality In response to the transition to electronic shares in 2009, we have added over 30 new branches since 2006, mainly in Tokyo, *Nomura Cube consultation booths are permanently staffed and offer easy access for passersby to receive investment information and brochures on financial products. Diverse Approaches With “Hotto Direct,” we are offering efficient telephone response via call centers and online services to our customers not only during regular business hours but also on weekends and after regular office hours on weekdays. In addition, we are holding Nomura Money Fairs more fre- quently and are offering more information and services through seminars for people approaching retirement as well as Japan’s equivalent of employee stock ownership plans. B u s i n e s s O u t l i n e / D o m e s t i c R e t a i l Expansion of Client Interface Addition of branch offices mainly in Tokyo, Nagoya, and Osaka in line with the geographical distribution of high-net-worth individuals and physically held stock certificates Client Assets Held by Branches Opened since 2006 223 4,618 413 2,921 2,046 663 528 655 400 Number of shareholders with physically held stock certificates (Thousands of people)* Location of Nomura Securities branches 10 branches 1 branch New branches opened since 2006 10 branches 1 branch *Source: Nomura, based on Japan Securities Dealers Association, Reform Promotion Center for Securities Clearing and Settlement System, “Distributional Survey of Stock Certificates Physically Held by Shareholders (December 2007).” (Billions of yen) 200 150 100 50 0 3/2006 3/2008 Annual Report 2008 23 G l o b a l M a r k e t s Product Center of Excellence: Delivering Sophisticated Services to Retail Business Environment Subprime Loan Fallout The subprime loan problems caused by the decline in the mar- ket for U.S. residential mortgage-backed securities (RMBS) have had a number of knock-on effects. These include the drop in the market for U.S. commercial mortgage-backed securities (CMBS), deterioration in the performance and credit standing of monoline insurers, and volatility in foreign exchange markets. In the latter half of 2007, market liquidity began to dry up, and severe business conditions persisted worldwide, adversely impacting the performance of many financial institutions. Evolving Client Base In recent years, new types of investors such as hedge funds, private banks, and private equity funds have taken on an increasingly prominent role alongside traditional institutional investors. Rising commodity prices and growth in emerging Market Changes Recent market developments include the movement in the United States toward best execution to minimize the impact of large orders on securities prices and the shift toward the unbundling of research and order execution fees following the tightening of regulations by the U.K. Financial Services Authority (FSA) three years ago. Also, as a result of the implementation of the Markets in Financial Instruments Directive (MiFID) in the European Union in November 2007, the rule that allowed EU member states to require brokers to route client orders through regulated markets has been abolished, and brokers are now required to use the exchange offering the best execution. These developments have led to a rapid rise in demand for equity trade execution services that incorporate cutting-edge technologies. Becoming World-Class Product Center of Excellence economies, meanwhile, have seen sovereign wealth funds gain In Fixed Income, we have set the objective of becoming a top- attention as new suppliers of risk capital. class fixed income house in Japan and the rest of Asia. In Equity, At the same time, investor interest in sophisticated hybrid we will leverage our dominant position in the Japanese market to investment products is increasing and this area is expected to establish our position as an Asian equity house with a competitive grow into a core business. advantage in Japanese equities and become a bulge bracket firm World Foreign Exchange Reserves World GDP Growth Forecast Advanced countries (excluding Japan and Norway) Major oil-producing countries Japan Other developing countries China World total Advanced countries Emerging and developing countries (Trillions of U.S. dollars) 7 6 5 4 3 2 1 0 (%) 9 8 7 6 5 4 3 2 1 0 1985 2007 1980 2013 Notes: 1. Major oil-producing countries: OPEC member countries, Norway, Russia, and Mexico. 2. Reserves denominated in special drawing rights (SDRs) have been converted to U.S. dol- Note: Figures for 2007 and later are forecasts. Source: IMF (forecasts as of April 2008). lars using the average rate for the year. Source: Nomura, based on IMF and Thomson Reuters data. 24 Nomura Holdings, Inc. Akira Maruyama, Chief Executive Officer, Global Markets and Wholesale Clients in the pan-Asian equity brokerage business. In Asset Finance, we being put to use to offer investment opportunities to our are enhancing our expertise to supply financial products that Japanese client base, as well as to new international clients such meet investors’ real estate related investment needs. as investment funds and private banks. Expanding and Enhancing Client Base commodity-linked products and enhancing systems that support We are also expanding our offerings in the area of credit and Along with the expansion in the investor base for structured product distribution. product sales, we are working with our colleagues in Global Investment Banking to expand and reinforce our client base. In P Equity broadening our investor base, we are targeting hedge funds, We are extending our product origination and offering capabili- sovereign wealth funds, international private banks, high-net- ties for Japanese equities as well as our industry-leading worth individuals in Asia, China’s Qualified Domestic Institutional research and sales strengths to include pan-Asian equities. Investors, and Japanese real estate investment trusts (J-REITs) Our lineup of exchange-traded funds (ETFs), including the as well as other real estate investment funds. At the same time, Next Funds series developed by Nomura Asset Management we are responding to the funding needs for project finance as and ETFs listed on exchanges outside Japan, is growing, and well as of regional financial institutions and local governments. we are developing and supplying equity derivative products. Enhancing Products and Services execution is increasing and the trend is toward the unbundling We are building up our capabilities for originating and develop- of execution and research, we are offering execution services ing products and delivering financial solutions to our clients. based on cutting-edge technologies such as algorithmic trading Moreover, in today’s market, where the demand for best P Fixed Income and transaction cost analysis (TCA). Through the combination of Nomura’s comprehensive services and Instinet’s execution Our expertise in developing structured products in Japan’s low capabilities, we are well positioned to respond to the needs of a interest rate environment and our derivative structuring skills are broad spectrum of investors. B u s i n e s s O u t l i n e / l G o b a l M a r k e t s Average Monthly Equity Transactions in Asian Markets (Excluding Japan and China) (Billions of U.S. dollars) 800 600 400 200 0 2003 2004 2005 2006 2007 Source: World Federation of Exchanges. P Asset Finance In real estate finance, we offer high-value-added services includ- ing financial advisory, the structuring of privately placed funds and CMBS, equity and mezzanine financing, and other services through a one-stop approach that draws on the capabilities of DBJ Nomura Investment (DNI) and Nomura Capital Investment (NCI), where appropriate. We are also branching out into real estate management operations, mainly through DNI, and are looking to deliver Asian real estate related products to clients. In addition, NCI delivers a flexible range of solutions to clients, focusing on providing financing for corporate M&A and buyouts. Annual Report 2008 25 G l o b a l I n v e s t m e n t B a n k i n g Asia’s Preeminent Investment Bank, Engine to Drive Nomura Group Revenue Business Environment This will no doubt stimulate realignment inside Japan and spur the formation of global alliances, thereby increasing M&A Taking Off in Japan, Corporates Shifting Gear in Global Strategies demand for investment banking services. *Source: Thomson Reuters. To raise their corporate value and stay ahead in today’s globally competitive environment, Japanese companies are increasingly tapping external resources and taking a closer look at strategic mergers and acquisitions (M&A). Becoming World-Class Global Investment Banking is building its position as Asia’s pre- In 2007, there were about 3,000* M&A deals involving eminent investment bank. We aim to be the investment bank of Japanese companies, with a total value of US$153.9 billion*. choice in Asia and an engine to drive revenue expansion at There have been over 2,000 M&A deals a year between Nomura Group. Japanese companies since 2005, while acquisitions of foreign companies by Japanese corporations have amounted to about 400. Moreover, in 2007 acquisitions of Japanese companies by Leadership in Japan: Maintaining a High Market Share foreign corporations increased sharply to record levels in terms Our strength lies in our dominant presence in Japan, backed by of number and value. our solid client base. In view of the rapid growth in the Brazil, Russia, India, and China (BRIC) markets and other emerging countries as well as Equity Finance the forecast for shrinking demand in Japan as a result of long- In fiscal 2007, the overall value of equity market transactions in term population decline, many Japanese companies are step- Japan declined due to the slump in domestic equity markets. ping up their global strategies. In particular, non-manufacturers However, we acted as lead manager for a number of major are expected to adopt a strategic focus on China as the coun- issues, including the initial public offering (IPO) of Sony Financial try’s service industries develop. Holdings, a euroyen convertible bond issue for recapitalization by M&A Deals in Japan M&A between Japanese companies Acquisitions, etc., of foreign companies by Japanese companies Acquisitions, etc., of Japanese companies by foreign companies (Number of deals) 3,000 2,500 2,000 1,500 1,000 500 0 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: Nomura, based on data from RECOF. 26 Nomura Holdings, Inc. Expansion Hiromi Yamaji, Chief Executive Officer, Global Investment Banking Yamada Denki, and a public offering by Daikin Industries. As a result, Nomura ranked No. 1 in the “Japan Equity & Equity- Related” league table* for the seventh consecutive year in fiscal 2007. In Europe, we have undergone a strategic buildup of our operations and acted as global coordinator on Russia’s largest- ever IPO, for PIK Group, a leading residential property developer. M&A Railway. Going forward, we will continue to market these solutions and products more broadly while developing other new products. International Operations: Asia’s Preeminent Investment Bank To take our international operations to the next level, we are increasing locally oriented businesses in each region and con- During fiscal 2007, Global Investment Banking acted as finan- tinuing to “Deliver Asia” by making our strengths in Asia, includ- cial advisor on such deals as the sale of All Nippon Airways’ ing Japan, available to clients in Europe and the United States. hotel business, the acquisition of all shares of Sanyo Shinpan In Europe, we are increasing the use of our business platform Finance by Promise, and the sale of Procter & Gamble’s built up over the past couple of years and expanding our opera- Attento business to Daio Paper. As a result, Nomura topped tions into the Commonwealth of Independent States (CIS) and Japan’s fiscal 2007 “Any Japanese Involvement Announced” Eastern Europe. In the Americas, we are maintaining and strength- league table*. *Source: Thomson Reuters. ening the functions and services of our global franchise. In Asia, we are focusing on key areas and strengthening our operations in India and China. We plan to raise the number of professional staff Product Diversification and Development members in our Asian operations from 90 to 130. Moreover, fol- Global Investment Banking provided a number of new financial lowing our practice in Japan and Europe, we are stationing sector solutions during fiscal 2007, including the underwriting of an bankers in Asia outside Japan and will expand the client coverage issue of non-voting preferred shares for ITO EN, a convertible of our global network by strengthening teamwork. bond issue for recapitalization by Yamada Denki, and the secu- ritization of earthquake risk (catastrophe bond) for East Japan B u s i n e s s O u t l i n e / l G o b a l I n v e s t m e n t B a n k i n g League Tables Equity Capital Markets Bookrunner League Table Japan Equity & Equity-Related M&A Financial Advisors League Table Any Japanese Involvement Announced Value base April 1, 2007 to March 31, 2008 April 1, 2007 to March 31, 2008 Rank Bookrunner Proceeds (US$ mn) Mkt. Share No. of Deals Rank Advisor Rank Value (US$ mn) Mkt. Share No. of Deals 1 2 3 4 5 Nomura JPMorgan 8,434.4 41.6% 2,300.8 11.3% Daiwa Securities SMBC 2,204.6 10.9% Nikko Citigroup 1,955.5 9.6% Morgan Stanley 1,405.6 6.9% 56 3 48 17 7 1 2 3 4 5 Nomura 24,778.8 19.4% Mitsubishi UFJ Financial Group 15,257.0 12.0% JPMorgan 14,714.4 11.5% 138 112 24 Daiwa Securities SMBC 14,559.9 11.4% 119 Citigroup 14,063.1 11.0% 84 Source: Thomson Reuters. Annual Report 2008 27 G l o b a l M e r c h a n t B a n k i n g Leading Presence in Private Equity Business Environment Global Financial Market Turmoil, Declining Equity Prices Changing Management Mind-Set Corporate managers in Japan are also changing their views. As global competition becomes more intense, there is a growing awareness that increasing corporate value is important for sur- The operating environment in fiscal 2007 was characterized by vival. An increasing number of managers are concluding that, if turmoil in the global financial markets and a prolonged decline their companies are to make effective use of their resources as in equity markets. Although Global Merchant Banking reported they focus on their core strengths, outside capital and human a strong profit for the third consecutive year, the decline in equi- resources should be considered as an alternative. ty prices that began in the middle of fiscal 2007 had an impact on our exit and new investment activities. Strategic Delistings Becoming World-Class We are establishing a leading presence in private equity by Japanese companies pursuing growth are starting to see making full use of Nomura Group’s resources. strategic delisting as a viable solution to address such manage- ment issues as realigning and restructuring businesses and revi- talizing operations. As investments by private equity funds increase, the opportunities for unlisted companies to raise out- side capital are growing. Structuring the Right Portfolio To realize our objective of generating annual income before income taxes of ¥30–¥40 billion on a sustainable basis, we are diversifying our portfolio of private equity investments, including the exit timing. Main Exits and Revenue Net revenue Income before income taxes NFP Selected to Acquire Ashikaga Bank YMC Sale of stake Deutsche Annington Sale of stake Sliontec Sale of stake (Billions of yen) 100 Deutsche Annington Partial sale of stake Tungaloy Partial sale of stake Wanbishi Archives Partial sale of stake Millennium Retailing Sale of stake 80 60 40 20 0 -20 3/2003 3/2004 3/2005 3/2006 3/2007 3/2008 28 Nomura Holdings, Inc. In March 2008, a consortium led by Nomura Financial Partners (NFP) and Next Capital Partners was selected to acquire Ashikaga Bank. Nomura Group is committed to con- tributing to the local communities where Ashikaga Bank has its home base by support- ing the bank’s growth and development as a regional financial institution. The main focus now will be on creating a more stable earnings base, structuring and maintaining a sound asset portfolio, and reinvesting in selected areas to return to growth in preparation to take the bank public. Shoichi Nagamatsu, Chief Executive Officer, Global Merchant Banking Over the next five years, we aim to build up a portfolio of around 25 investee companies by investing in three to five Japanese companies each year, with an investment horizon ranging from three to five years, and with a target internal rate of return of 20%. As of March 31, 2008, our business exposure excluding Terra Firma* was about ¥210 billion. We aim to increase this to ¥300 billion over the next few years to ensure we are able to deliver stable profits, and we are looking to exit Strategic Development Overseas In May 2007, we established Asia Merchant Banking in Hong Kong, which will draw on the extensive merchant banking expe- rience of Nomura Group in Japan and Europe and leverage the strength of the Nomura brand in Asia to identify promising, growth-stage Asian companies and provide them with risk capi- tal. Our main focus will be growth investments in companies in the environment, consumer, and media related fields in China the majority of our exposure through Terra Firma. and India. We are also engaged in venture capital activities in Japan, Europe, and the United States. From our base in London, we invest in biopharma, healthcare, and clean technologies compa- nies, and we are creating funds in Europe to take advantage of the special characteristics of this region. The private equity market in Japan is becoming increasingly competitive as private equity funds grow in size and become more active. To differentiate ourselves in this competitive mar- ket, we will tap the deep internal resources of Nomura Group throughout the whole investment process. Drawing on our own network will allow us to seek out new investment opportunities without having to go through a competitive bid process, and to provide a difference when boosting the value of investee com- panies and exiting from investments. *Terra Firma is an independent private equity firm based in Europe. Major Investments and Exposure Japan Europe (Excluding Terra Firma) Terra Firma B u s i n e s s O u t l i n e / l G o b a l M e r c h a n t B a n k i n g Taiyo Electric (Subsidiary of NEC) Management buyout Tungaloy (Formerly Toshiba Tungaloy) Management buyout Sliontec (Subsidiary of Hitachi) Management buyout YMC Review of shareholder composition Huis Ten Bosch Revitalization sponsor Millennium Retailing Capital increase Misawa Homes Capital increase Wanbishi Archives Management buyout Resort Solutions (Formerly Misawa Resort) Capital increase Tsubaki Nakashima Management buyout Skylark Management buyout Mitsui Life Insurance Capital increase Eastern Capital increase Kawamura Electric Review of shareholder composition (Billions of yen) 600 500 400 300 200 100 0 3/2003 3/2004 3/2005 3/2006 3/2007 3/2008 Notes: 1. Exposure in Japan is the total for Nomura Principal Finance (NPF), Nomura Financial Partners (NFP), Nomura Research and Advisory (NR&A), and others. 2. Exposure in Europe (excluding Terra Firma) is the total for Private Equity Group (PEG) and Nomura Phase4 Ventures (NPV). Annual Report 2008 29 A s s e t M a n a g e m e n t World-Class Player with Strong Investment Capabilities in Japan and Business Environment Continuing Flow of Funds into Investment Trusts With the ongoing shift from savings to investment products in Becoming World-Class We have adopted a multiproduct, multichannel approach and are developing our advisory services for Japanese investors by Japan, the investment trust market is expanding rapidly on the enhancing our expertise to deliver world-class investment capa- back of increased demand for asset management services and bilities. In addition, we are offering a broad spectrum of invest- the opening up of new sales channels. Although total assets ment products to leading institutional investors outside Japan under management in investment trusts in the Japanese market as we develop new sales channels. To facilitate these activities, declined 4%, to ¥102 trillion, in the year to March 2008 due to a we are aggressively investing in the necessary IT infrastructure drop in global equity markets and an appreciating yen, publicly and fostering a culture where our people can create new value. offered investment trusts saw a net inflow of ¥11.6 trillion, mark- Our aim is to be a world-class player with assets under man- ing the third straight year of inflows above ¥10 trillion. agement of ¥43 trillion* in three years. *Total of ¥50 trillion for all Asset Management Division firms minus asset overlap. Diversification of Sales Channels Since the market for the sale of investment trusts in Japan was Multiproduct, Multichannel Strategy opened to financial institutions other than securities firms in In the investment trust market for Japanese retail investors, we 1998, the range of investment trust sales channels has contin- are further developing our multiproduct, multichannel approach ued to expand, increasing the investor base. As of March 31, and working to establish a dominant presence. 2008, the balance of net assets in domestic investment trusts For some time now, we have focused on strengthening our sold through banks was approximately ¥30 trillion. Of this total, investment capabilities. These efforts were recognized when the Japan Post Bank accounted for ¥1 trillion. Nomura Global Six Assets Diversified Fund (Profit Distribution Type) received the Morningstar Award “Fund of the Year 2007” Best Awarded Fund in the Hybrid Fund Division. To build on this Total Net Assets in Publicly Offered and Privately Placed Investment Trusts by Sales Channel Securities firms (publicly offered) Japan Post Bank (publicly offered) Banks, etc. (publicly offered) Direct (publicly offered) Privately placed (Trillions of yen) 120 Total Assets under Management (Trillions of yen) 30 100 80 60 40 20 0 25 20 15 10 5 0 3/2004 3/2005 3/2006 3/2007 3/2008 3/2004 3/2005 3/2006 3/2007 3/2008 Source: The Investment Trusts Association, Japan. 30 Nomura Holdings, Inc. Notes: 1. Total assets under management of Nomura Asset Management, Nomura Corporate Research and Asset Management, Nomura Funds Research and Technologies, MAINTRUST KAG, Nomura Funds Research and Technologies America, and Private Equity Funds Research and Investments. Adjusted for asset overlap among Group companies. Data to March 31, 2006, includes Nomura BlackRock Asset Management. 2. Nomura Funds Research and Technologies America data as of the end of February 2008. Atsushi Yoshikawa, Chief Executive Officer, Asset Management Asia momentum, we remain focused on offering world-class invest- ment capabilities to our clients. Multiproduct Strategy Nomura Asset Management has set a goal of establishing its brand as the largest originator of exchange-traded funds (ETFs) in Japan. In October 2007, we introduced Next Funds, a unified brand for our ETFs, which had grown to 26 funds as of March 31, 2008. Private Equity Funds Research and Investments (PEFR&I) commenced operations in February 2008 to manage and evalu- ate private equity funds and has added private equity vehicles to our investment product lineup. Multichannel Strategy As part of our multichannel strategy, we are working to ensure we are able to respond with speed to provide products and services that meet the specific needs of each channel. In the bank sales channel, we hold seminars and run advertisements to support the sales strategies of individual banks and we are working to raise the profile of the Nomura brand. International Initiatives: Enhancing Capabilities, Expanding Distribution Channels Internationally, we are expanding our asset management busi- ness across Asia. In view of the increasing global demand for portfolio management services for Asian equities, we are increasing the number of portfolio managers and related per- sonnel and bolstering our investment management structure for Asian equities. In Korea and Taiwan, we are also selling invest- ment trusts that invest in Japanese stocks and other investment instruments through local distribution channels. Looking ahead, we plan to extend our investment trust distribution channels to other countries in Asia. In the investment advisory business, demand among over- seas investors for our fund management services is strong. In addition to our extensive experience in managing Japanese equities, we are also continuing to receive further mandates from major overseas institutional investors for the management of non-Japanese Asian equities. This is another area where we aim to be a world-class player in the supply of Japanese and Asian equity products and other financial instruments. B u s i n e s s O u t l i n e / A s s e t M a n a g e m e n t Award-Winning Funds O “R&I Fund Award 2008”: First Prize for a Japanese REIT Fund in the Investment Trusts Category O “R&I Fund Award 2008”: 2008 Award for a Global Bond Fund in the Defined Benefit Pension Category O “Lipper Fund Awards Japan 2008”: First Prize among 14 Entries in the Investment Trusts Category O Morningstar Award “Fund of the Year 2007”: Morningstar Best Awarded Fund in the Hybrid Fund Division O “Fifth Annual Mercer MPA (Japan) Awards”: Comprehensive Division Award for Foreign Bonds O “R&I Fund Award 2007”: First Prize for Japanese Mid and Small Caps Equity Fund in the Investment Trusts Category 2007 O “R&I Fund Award 2007”: First Prize for a Global Equity Fund in the Investment Trusts Category O “R&I Fund Award 2007”: First Prize for an Asia-Oceania Equity Fund in the Investment Trusts Category O “R&I Fund Award 2007”: First Prize in the Japanese Bond Fund Defined Contribution Pension Category O “R&I Fund Award 2007”: Second Prize in the Japanese Bond Fund Defined Contribution Pension Category O “Lipper Fund Awards Japan 2007”: First Prize among Four Entries in the Investment Trusts Category O Morningstar Award “Fund of the Year 2006”: Morningstar Best Awarded Fund in the International Stock Fund Division O Morningstar Award “Fund of the Year 2006”: Morningstar Awarded Fund in the Domestic Stock Fund Division O Morningstar Award “Fund of the Year 2006”: Morningstar Awarded Fund in the Hybrid Fund Division J-REIT Open International Bond Active Nomura Global Six Assets Diversified Fund (Profit Distribution Type) International Bond Active Small Capitalization Blue Chip Open Global High Income Stock Fund Nomura China Stock Fund Course B NOMURA Japan Bond Fund DC NOMURA Japan Bond Open DC Global High Income Stock Fund Nomura Japan Open Global Three Assets Balance Fund (Monthly Distribution) (“Session”) Annual Report 2008 31 Global Research Our Global Research operations are charged with keeping a close watch on changing economic, industrial, and corporate trends around the world and developing timely investment ideas for clients. Our strength lies in the research and analytical expertise we have accumulated since our founding and the extensive databases that support this. In addition to providing information to help clients History of Nomura Research Research is part of Nomura’s DNA. Our founder, Tokushichi into a separate company, Nomura Research Institute (NRI), thus following the precedent established by U.S. companies in setting up think tanks. Subsequently, Nomura reviewed its research Nomura II, realized the importance of scientific research early on. activities and in April 1997 securities research functions were He formed a research department in Nomura Shoten, the prede- assigned to the Nomura Securities Financial Research Center. cessor company to Nomura Securities, in 1906, and started pub- The center has marked its 10th anniversary and undergone a lishing the Osaka Nomura Business News, which later became number of organizational changes. At present, the center con- the Weekend Report and is now known as the Nomura Weekly sists of two research divisions: the Financial & Economic Report. Research Center, which conducts fundamental research, and the When Nomura Securities was founded in 1925, it formed a Quantitative Research Department. research department from the outset. In 1926, the research Additionally, Nomura Research & Advisory was established in department began the publication of Capital Market Research, February 2000 to conduct research on unlisted companies. In which later became Capital Market Visions, to communicate the April 2004, the Nomura Institute of Capital Markets Research was results of its research in Japan and overseas. launched as a think tank independent of Nomura Group’s One of the milestones in research during the postwar period research organization to conduct practical research and make was the splitting off of Nomura’s research department in 1965 proposals for public policy. Financial & Economic Research Center Marks 10th Anniversary Nomura’s Financial & Economic Research Center celebrated its 10th anniversary last year with the publication of three books, as discussed below. Also, on March 15, 2008, the center held a 10th anniversary seminar entitled, “China Money Moves the World—Japan Seeks to Sustain Its Economic Vitality.” The Era of China Money While China continues to experience remarkable development, it is also wrestling with a number of problems such as environmental issues, gaps in income levels, regional disparities, and a growing external imbalance. To deal with its external imbalance, the Chinese government is relaxing restrictions on overseas travel and out- ward investment. At the same time, the pres- ence of “China money” is growing. Where will China go from here? Why have the prices of Chinese equities risen so sharply? This publication examines current conditions in China as the country seeks to attain sus- tainable growth while confronting the major issues it must address. The Japanese Economy— Conditions for Sustaining Vitality Japan is said to be in a “Goldilocks economy,” charac- terized by low inflation, low interest rates, and econom- ic expansion without signs of overheating. As the Japanese population declines, Japan is aiming to cre- ate a new economic structure, but where will it go from here? How can Japan’s manufacturers compete in an increasingly global world, and what lies ahead for non- manufacturing industries as they confront weakening domestic demand? Unless the government and household sectors respond to ongoing changes, they may not be able to overcome the challenges of population decline. This publication focuses on the corporate dynamism in both the manufacturing and nonmanufacturing industries and gives specific examples of Japan’s evolving economy. Learning from Cutting-Edge Financial Engineering— Strategies for Asset Management Financial engineering has made substantial progress in many areas over the past 10 years. Nomura’s Quantitative Research Department conducts R&D activities aimed at applying these new developments to practical operations. This publication selects 11 fields within financial engineering and presents expla- nations by financial professionals of the latest research results. These include the age-old but always topical issue of whether returns from equity investments can be forecast as well as the diverse range of financial derivatives, investment styles, and methods for individual investors to manage their assets. 32 Nomura Holdings, Inc. make asset management decisions, we work to enhance our financial technologies by developing systems that take full advantage of financial engineering techniques. Global Research Structure Nomura’s Global Research team includes approximately 520 Moreover, we are building up our research team in London that covers emerging markets, an area of increasing interest to investors. members, about 340 in Japan and 180 in international offices. The In quantitative research, the Quantitative Research Department research structure in Japan includes the Financial & Economic acts as the focal point and works closely with offices in New York, Research Center, the Quantitative Research Department, the London, and Hong Kong. Principal activities include drawing on Global Research Planning & Support Department, and Nomura the core skills of financial engineering and IT to conduct R&D in a Research & Advisory. In addition, Nomura has researchers across broad range of areas, including asset management, trading, prod- Asia, in the United Kingdom, and in the United States. uct development, risk management, and financial management. In the fundamental research field, the Financial & Economic Global Research teams in Japan and overseas work together Research Center has more than 100 professionals in Japan, closely to follow developments in economies and capital markets, including economists, strategists, and analysts. They collaborate prepare forecasts of future trends, and distribute information with colleagues in our offices in the rest of Asia, Europe, and the proactively through reports and seminars. We remain dedicated to United States to analyze economies, stock markets, industries, providing information that helps our clients enhance their invest- companies, and related issues. In view of Nomura’s strategic focus ment performance. on Asia, we are enhancing our research capabilities in that region. Analyst Ranking (2008) by The Nikkei Veritas All-Japan Research Team (2008) by Institutional Investor Rank Firm Name 1 2 3 4 5 6 7 8 9 Nomura Securities Daiwa Institute of Research UBS Mitsubishi UFJ Securities Nikko Citigroup JPMorgan Securities Japan Credit Suisse Goldman Sachs Japan Mizuho Securities 10 Morgan Stanley Japan Securities Points 13,573 12,532 9,444 9,021 7,657 6,590 6,569 5,820 5,290 4,165 Rank Firm Name Total Team Position 1 2 2 4 5 5 7 8 9 9 Nomura Securities Daiwa Institute of Research UBS JPMorgan Securities Japan Goldman Sachs Japan Morgan Stanley Japan Securities Credit Suisse Merrill Lynch Japan Securities Mitsubishi UFJ Securities Nikko Citigroup 24 18 18 15 13 13 12 11 10 10 P Key Topics in Fiscal 2007 The Economic Research Department of Nomura’s Financial & In addition, the Quantitative Research Department develops and offers indexes to provide benchmarks for the manage- Economic Research Center has developed an original indica- ment of various types of securities in Japan and overseas tor, the Nomura Regional Economic Index (NMRI). This index markets. On October 23, 2007, an exchange-traded fund consists of a coincident indicator that reflects trends in region- (ETF) linked to one of those indexes, the Russell/Nomura al economies and a leading indicator that shows the future Small Cap Core Index, was listed on the Osaka Securities direction of economic conditions, thus making it possible to confirm the current situation in regional economies and future Exchange. This ETF is one of the Next Funds, a series of next- generation funds being developed by Nomura Asset directions at a glance. These indicators are revised on a Management. It is the first ETF in Japan linked to small-cap monthly basis and are expected to be extremely useful as stocks. they provide a faster and surer way to understand trends in regional economies. l G o b a l R e s e a r c h Annual Report 2008 33 Corporate Governance and Internal Control System Basic Stance Nomura Holdings aims for transparency in all its opera- governance and corporate social responsibility (CSR) that tions and strives to ensure the quick, responsive man- all Nomura Group executives and employees should be in agement of Nomura Group as a whole. While working to compliance with in order to fulfill their responsibilities to enhance the corporate value of the Group in the medium Nomura Holdings shareholders and all other stakeholders. to long term, we are fully aware that strengthening corpo- During the fiscal year under review, we sincerely regret rate governance is of the highest priority and accordingly to report that a former employee of our subsidiary Nomura implement initiatives to strengthen and improve our gov- Securities was found to have engaged in insider trading. ernance systems. We wish to express our apologies for the concern and Among these initiatives, we are actively implementing inconvenience this has caused our customers and other reforms to ensure management transparency. When the stakeholders. Group made the transition to a holding company struc- Following the arrest of this former employee in April ture in October 2001, we appointed outside members to 2008, Nomura Securities formed a special investigation our Board of Directors with the objective of strengthening committee composed of independent, outside members management oversight functions. Nomura Holdings also to provide their assessment and recommendations formed an Internal Controls Committee in which an out- regarding this issue. Based on their recommendations, to side director also participates, created a Compensation prevent a recurrence of similar incidents in the future, we Committee with a majority of outside directors, and are devoting our fullest efforts to strengthening our infor- formed an Advisory Board composed of prominent per- mation management policies and procedures as well as to sons. When we listed our shares on the New York Stock making improvements in the content of our personnel Exchange in December 2001, we further expanded our management and training activities. In July 2008, we information disclosure to increase the transparency of our received an order, which was not related to any legal vio- management systems and activities. In June 2003, we lations, from Japan’s Financial Services Agency (FSA) to adopted the Committee System corporate governance implement business reforms in areas where the FSA saw model and separated the management oversight func- certain inadequacies in our operations. In response, we tions from the day-to-day execution of business activities. have submitted a report on corrective measures we will We also focused governance on the Nomination, implement, and it has been accepted by the FSA. Audit, and Compensation committees, thereby substan- As our business operations have become increasingly tially strengthening management oversight functions and diverse and global in scope and have come to require dif- increasing transparency. ferent types of employment relationships as well as a Along with this, the Group’s executive officers were greater diversity in personnel, we are acutely aware that delegated substantially greater authority for conducting strengthening our compliance systems has become an operations and they have subsequently executed busi- increasingly important issue. We are committed to creating ness activities quickly and responsively from a consolidat- top-class internal control systems, even by international ed perspective. standards, by placing maximum emphasis on the obser- Moreover, in 2004, we drew up the Code of Ethics of vance of rules and regulations and making improvements in Nomura Group, which specifies issues related to corporate our education and training programs for workplace ethics. Corporate Governance (Nomura Holdings) Business Execution, Audit/Oversight, operations to the executive officers, allowing executive Nomination, and Compensation Decision Making officers to carry out business activities flexibly. Since Nomura Holdings adopted the Committee System We are working to strengthen and expand our internal of corporate governance, the Board of Directors has del- control systems to ensure the proper conduct of corpo- egated substantial authority for the execution of business rate activities throughout the Group, with the aims of 34 Nomura Holdings, Inc. securing transparency and efficiency in management, p Audit Committee ensuring compliance with laws and regulations, manag- ing risk properly, securing the reliability of business and financial reporting, and promoting timely and appropriate information disclosure. P Three Committees The Nomination Committee, Audit Committee, and Compensation Committee have been given the authority to make decisions on issues including candidates for the The Audit Committee is composed of a majority of out- side directors and is responsible for auditing the busi- ness execution of the directors and executive officers and preparing audit reports. It also makes decisions regarding proposals to be submitted to the Ordinary General Meeting of Shareholders concerning the appointment and dismissal of independent auditors. No directors who are representative executive officers, including the CEO, or executive officers are members of Board of Directors, audits concerning the business exe- the Audit Committee. cution of directors and executive officers, and compen- sation for directors and executive officers, respectively. p Compensation Committee As such, management oversight is conducted by the Board of Directors. p Nomination Committee The Nomination Committee is composed of a majority of outside directors and is responsible for decisions regard- ing proposals made to the Ordinary General Meeting of Shareholders concerning the appointment and dismissal of directors. No directors who are representative execu- tive officers, including the CEO, or executive officers are members of the Nomination Committee. The Compensation Committee is composed of a majority of outside directors. This committee decides on policy for decision making regarding the content of compensation and related matters for directors and executive officers, and makes decisions on the specific content of compen- sation and related matters for individual directors and executive officers. No directors who are representative executive officers, including the CEO, or executive offi- cers are members of the Compensation Committee. Management Structure Shareholders’ Meeting Board of Directors (11*) President & CEO Nomination Committee (2*) Audit Committee (23*) Compensation Committee (3*) Group Management Committee Risk Management Committee Risk Management Sub Committee Internal Controls Committee Office of Audit Committee *Number of meetings held in fiscal 2007 Advisory Board PAdvises the Group Management Committee PMembers are prominent businesspeople Annual Report 2008 35 C o r p o r a t e G o v e r n a n c e a n d I n t e r n a l C o n t r o l S y s t e m Corporate Governance and Internal Control System Business Execution System Nomura has formed a Group Management Committee, Management Committee is responsible for deliberating Risk Management Committee, and Internal Controls and deciding on important risk management issues for Committee to ensure that executive officers make busi- Nomura Group, such as the Group’s response to require- ness decisions smoothly and in an appropriate manner. ments under Basel II. The Risk Management Sub Group Management Committee Management Committee to make assessments and deci- Chaired by the CEO, the Group Management Committee sions regarding positions and important risk management Committee has been established under the Risk includes the COO, the business division CEOs, and other issues. person(s) designated by the CEO. The Group Management Committee is responsible for deliberating Internal Controls Committee and making decisions related to important management The Internal Controls Committee is chaired by the CEO issues for Nomura Group, such as management strate- and is comprised of person(s) designated by the CEO, gies, business plans, and budgets as well as the allocation Audit Committee member(s) designated by the Audit of management resources. Committee, and Director(s) (Audit Mission Director(s)) designated by the Board of Directors. The Internal Risk Management Committee Controls Committee is responsible for establishing and The Risk Management Committee is chaired by the CEO evaluating internal controls concerning Nomura Group and includes the COO, the business division CEOs, and operations as well as for deliberations and decisions to other person(s) designated by the CEO. Under the dele- promote proper corporate behavior. gation of the Group Management Committee, the Risk Internal Controls Nomura Holdings adopts a range of measures to ensure Crisis Management that decision making related to the conduct of opera- To minimize the impact of natural disasters, fires, and tions by the executive officers proceeds smoothly and other crises, both in Japan and overseas, and return to appropriately. Fair Disclosure normal operations as quickly as possible following such incidents, Nomura Group has established the Nomura Group Crisis Management Policy. In addition, the To ensure investors have fair access to information Nomura Group Crisis Management Committee is respon- regarding Nomura Group, we have established Nomura sible for Groupwide crisis management plans and action Group’s Statement of Global Corporate Policy programs. Regarding Public Disclosure of Information. The Disclosure Committee deliberates and makes decisions Information Security regarding appropriate ways of disclosing material infor- Nomura Group has established an Information Security mation related to Nomura Group, preparation of legally Policy in relation to client information to ensure that such mandated disclosure documents, and important items information is strictly protected and managed. Nomura related to the disclosure of corporate information based Securities has also prepared internal regulations that on this statement. include Regulations Regarding Insider Trading to strictly manage information related to corporate clients. 36 Nomura Holdings, Inc. Compliance Risk Management Nomura Group works to prevent behavior that may give To provide for comprehensive control, monitoring, and rise to the suspicion of violations of legal regulations. The reporting on the various types of risks inherent in the following measures have been taken to ensure that all activities of Nomura Group, the following measures have related information is promptly communicated to man- been implemented. agement without exception, should such issues arise. P Top management actively committed to risk P Appointment of a Group Compliance Officer management P Appointment of Compliance Officers P Establishment of overall control of risk management P Provision of a compliance hotline P Addressing legal risk globally through the formation of a Risk Management Committee and Risk Management Sub Committee P Management by globally linked risk management departments and risk management at operating level Note: For details regarding internal controls in the conduct of business operations, please refer to Corporate Governance in the Investor Relations section of www.nomura.com. Compensation for Directors and Executive Officers Nomura Holdings has two basic compensation policies (1) Base Salary for directors and executive officers: (1) in line with the The base salary of each director and executive officer is attainment of management objectives, to set compensa- the sum of amounts based on each individual’s career, tion levels flexibly to significantly raise management moti- posts held to date, responsibilities, and the degree of vation and empower individuals to realize their maximum attainment of the target return on equity (ROE) on a con- potential and (2) to introduce compensation linked to the solidated basis. value of the Company’s stock to enhance long-term incentives. The total amount of compensation paid to (2) Cash Bonus directors and executive officers for the fiscal year ended The cash bonus is based on quantitative factors such as March 31, 2008, was ¥1,643 million. The compensation consolidated net income, ROE, and the earnings of busi- of directors and executive officers is composed of a ness divisions. This bonus is also based on qualitative base salary, cash bonus, and stock bonus. items, such as the degree of attainment of management Position Number1 Compensation As of March 31, 2008 Directors (Outside directors) Executive Officers Total 8 (4) 13 21 ¥445 million (¥131 million) ¥1,198 million targets and personal targets, assessments of individual contributions, and other factors. The aggregate cash bonuses of directors and executive officers may not exceed 1% of consolidated net income. (3) Stock Bonus ¥1,643 million2, 3, 4 The stock bonus is determined separately for each indi- 1. As of March 2008, there were 11 directors and 13 executive officers. Of this total, three persons held positions as directors and executive officers concurrently. Compensation of the persons holding offices of director and executive officer con- currently is included in the compensation figure for executive officers. 2. The figure of ¥1,643 million includes ¥534 million in compensation paid in the form of stock options (stock-related compensation). (A total of 21 persons received com- pensation in the form of stock options.) 3. The figure of ¥1,643 million includes ¥2 million in compensation paid in a non- monetary form. 4. The figure of ¥1,643 million includes ¥213 million paid as retirement allowances (to two persons), as approved by a vote at the 98th Ordinary General Meeting of Shareholders (held on June 26, 2002). vidual by taking into consideration all applicable factors. These include parameters such as consolidated net income and ROE as well as the level of this compensa- tion relative to the base salary, cash bonus, and other stock bonuses and the benefits relative to the cost of providing such compensation. Annual Report 2008 37 C o r p o r a t e G o v e r n a n c e a n d I n t e r n a l C o n t r o l S y s t e m Corporate Governance and Internal Control System Board of Directors Title Name Responsibilities and Status in Other Companies Chairman of the Board Junichi Ujiie Director Kenichi Watanabe President & Chief Executive Officer Director Takumi Shibata Deputy President & Chief Operating Officer Director Masaharu Shibata Chairman of NGK Insulators, Ltd. Chairman of NGK Technica, Ltd. Statutory Auditor of Chubu-Nippon Broadcasting Co., Ltd. Director Hideaki Kubori Chairman of Hibiya Park Law Offices Statutory Auditor of SOURCENEXT CORPORATION Director Haruo Tsuji Corporate Advisor of Sharp Corporation Outside Director of Kobayashi Pharmaceutical Co., Ltd. Director Fumihide Nomura President of Nomura Shokusan Co., Ltd. Director Tsuguoki Fujinuma Advisor of The Japanese Institute of Certified Public Accountants Director of Tokyo Stock Exchange Group, Inc. Governor of Tokyo Stock Exchange Regulation External Corporate Auditor of Sumitomo Corporation External Auditor of Takeda Pharmaceutical Company Limited Outside Director of Sumitomo Life Insurance Company Director Masahiro Sakane Chairman of the Board of Komatsu Ltd. External Corporate Director of Tokyo Electron Limited Director Masanori Itatani Director Yoshifumi Kawabata Note: A double circle indicates the committee chair. (As of July 1, 2008) Nomination Committee Audit Committee Compensation Committee Audit Mission Director po p p po p p po p p p p From left: [Back row] Masanori Itatani, Junichi Ujiie, Kenichi Watanabe, Takumi Shibata, Yoshifumi Kawabata From left: [Front row] Tsuguoki Fujinuma, Fumihide Nomura, Haruo Tsuji, Masaharu Shibata, Masahiro Sakane, Hideaki Kubori 38 Nomura Holdings, Inc. Executive Officers and Business Division CEOs Executive Officers (As of July 1, 2008) Title Name Main Responsibilities President Kenichi Watanabe Chief Executive Officer Deputy President Takumi Shibata Chief Operating Officer Executive Managing Director Akihiko Nakamura Chief Information Officer Executive Managing Director Toshio Hirota Head of Communications Executive Managing Director Hideyuki Takahashi Head of Internal Audit Executive Managing Director Yugo Ishida Head of Regional Management, Europe Senior Managing Director Akihito Watanabe Head of Group Human Resources Development Senior Managing Director Shigesuke Kashiwagi Head of Regional Management, Americas Senior Managing Director Masafumi Nakada Chief Financial Officer Senior Managing Director Noriaki Nagai Head of Corporate Office Senior Managing Director Senior Managing Director Yoshinori Go Yuji Nakata Head of Regional Management, Asia Global Markets (Based in Europe) Senior Managing Director Yoshihiro Fukuta Head of Regional Management, Asia Business Division CEOs (As of July 1, 2008) Responsibility Domestic Retail Global Markets Global Investment Banking Global Merchant Banking Asset Management C o r p o r a t e G o v e r n a n c e a n d I n t e r n a l C o n t r o l S y s t e m Name Hitoshi Tada Akira Maruyama Hiromi Yamaji Shoichi Nagamatsu Atsushi Yoshikawa Annual Report 2008 39 Corporate Social Responsibility Our Commitment to the Environment Nomura Group is committed to reducing the environ- mental impact of the Group as a whole and contributing to resolving environmental challenges through our inno- vative financial services. With this in mind, we focus our efforts on the following priority areas: promoting environ- mental conservation activities, disclosing environmental information, and proactively working to resolve environ- mental issues. In addition to these efforts, Nomura Group is actively involved in solving environmental prob- lems by investing its own capital in environment-related companies. Reducing the Environmental Impact of the Group as a Whole P Environmental Activities Working Group P Purchasing Green Power Certificates P Nihonbashi headquarters wins the highest evaluation, “AAA,” from the City of Tokyo P Reducing paper consumption P Nomura International plc receives ISO 14001 certification Fiscal 2007 Objectives and Results Programs Global warming prevention Promotion of green purchasing Policies Reduce greenhouse gas emissions at Nihonbashi headquarters Study how to reduce domestic office energy consumption Increase “green” procurement ratio Track results for all domestic offices 75% “green” procurement Establish Group guidelines Policy-making/staff training Waste manage- ment/reduction Management systems Promote recycling Promote paper recycling Strengthen Group promotion system, Group environmental training Recycle 90% of waste Recycle ratio of 98% Build global network of Group offices and companies Efforts to Solve Environmental Issues through Investment P Investing our own capital in environment-related companies O Regarding environmental and new energy fields as growth areas, supporting unlisted companies in their path towards initial public offerings and investing in cutting-edge environment-related companies O Clean technology venture funding from a global point of view P Providing environment-related research and infor- mation to investors O Launching the NOMURA ECOLOGY FOCUS project to enhance our environmental conservation efforts by providing investors with additional research on indus- tries and technologies that contribute to the protection of the earth’s environment O Holding the Nomura Global Environment E C O LOG Y F O C U S Technology Conference P Providing environment-related funds O Nomura Aqua Investment O Global Umbrella - UBS (JP) Global Warming Ecology O World Water Fund Targets Fiscal 2007 Results Comments 20% reduction vs. FY2001 28% reduction vs. FY2001 Seek further cuts Energy consumption for all balances was estimated on the basis of a survey of a sample of branches 61% (55.8% in FY2006) Formulation of specialized guidelines for green purchasing of IT equipment 92.6% (93.6% in FY2006) Nihonbashi HQ 94.8% (98.5% in FY2006) Nihonbashi HQ Environmental awareness-raising through our intranet Studying measures to cut energy consumption at all branches Continued training of purchasing officers Studying ways to incorporate within Group Continuing to promote Continuing to promote Continuing initiatives to raise employee awareness * The recycling rate was lower than the previous year largely because the volume of waste produced was reduced significantly, down 10.3% from FY2006. * Initiatives to achieve 2008 targets to focus on the FY2007 goals not achieved. Relationship with Society With “Investing for the future—Contributing to a brighter tomorrow” as Nomura Group’s philosophy concerning contributing to society, we aim to support the economy, arts, and academia through our business activities. We focus on the three important areas of: (1) the spread of financial and economic education, (2) promoting exchange and dialog with local communities, and (3) socially minded business activities. Support for Culture, the Arts, and Academia P Financial and economic education O Providing a broad range of opportuni- ties for financial and economic education 40 Nomura Holdings, Inc. In March 2008, with guidance from Professor Sawa, we produced The Economics Classroom as a supplemen- tary text for students in the latter years of elementary school. This text was positioned as a lead-in to the pre- viously released T-Shirt Shop. P Support for culture and the arts O Nomura Group and the Nomura Cultural Foundation support the Pacific Music Festival as one of the festi- val’s special corporate supporters since its inception in 1990. P Community involvement initiatives O Nomura Group undertakes various initiatives to meet its responsibilities as a good corporate citizen in each of the communities to which it belongs. Contributing to the Development of Society through Investment P Providing financial solutions in the healthcare field O Supporting a management improvement program for hospitals and nursing homes, arranging and investing in financing solutions P Providing Nomura Group’s SRI funds O Nomura Global SRI 100, popularly known as Nomura Global Social Responsibility Investment O Morningstar SRI Index Open, popularly known as Tsunagari O Nomura Global SRI Index Fund DC (for defined contri- O Investing in life-science-related companies and bution pension plans) cutting-edge medical companies Relationship with Customers Nomura Group is committed to engaging in business in a manner that meets the needs of its clients, and strives to be recognized as an asset to society by satisfying the expectations of a broad spectrum of customers. In recognition of their importance, we focus on promoting client-oriented management, eliminating information asymmetry, and responding to the diverse needs of mar- kets and customers. Initiatives to Improve Customer Satisfaction O Initiatives to address the enforcement of the Financial Instruments and Exchange Law The Financial Instruments and Exchange Law and asso- ciated ordinances (new law and ordinances) came into effect on September 30, 2007. In addition to creating an internal structure to ensure compliance with the new law and ordinances, we have initiated measures so that our clients will also understand the new requirements. Relations with Our Employees Training to Realize Full Potential Allowing our employees to reach their full potential is at the core of Nomura Group’s personnel system. Nomura Group treats its employees as individuals and provides a variety of opportunities for employees with ability and desire, regardless of gender or age. Employees who perform to their potential are compensated accordingly. This aims to give all employees greater responsibility for their work and provide the incentive for them to perform to their full potential. We believe this also adds vitality to the Company as a whole. O Retiree rehiring system O Providing training and development program Securing Diverse Human Resources and a Work-Friendly Environment Nomura Securities actively recruits and promotes women. We have women-only branch offices and Providing Products and Information to Clients (Eliminating Information Asymmetry) We analyze the financial products we offer with due care and provide our clients with accurate information and easy-to-understand advice. These measures demon- strate our commitment to offering services fit for a responsible financial institution in originating products, providing information, and soliciting business. Nomura Securities is establishing completely new types of branches that are not held back by conventional concepts. Through these new branches, such as virtual branches, we invite people to enjoy learning about investment trends and how investing works. O Established an information hub, Nomura Cube, within Second Life® O Opening joint branch with St-Marc Café O Opening branches in medical centers Virtual branch departments and have established a section to plan and formulate career development policies for our female employees. We also have guidelines for actively recruit- ing the elderly, persons with disabilities, and non- Japanese people in Japan. O Happy Career & Life project O Mental health care O Child care and family nursing care support O Work/life initiatives Diversity and Human Rights (in Japan) People (employees) are Nomura Group’s most important asset. Increasing human rights awareness in order to maintain respect for human rights and prevent discrimi- nation and harassment is a top priority. O In-house human rights training programs C o r p o r a t e S o c i a l R e s p o n s i b i l i t y Annual Report 2008 41 Seven-Year Financial Summary (U.S. GAAP) For the fiscal years beginning April 1 and ending March 31 of the following year Note: This financial summary is prepared solely for convenience. Readers are recommended to refer to the Form 20-F. Operating Results: Revenue: Commissions Fees from investment banking Asset management and portfolio service fees Net gain on trading Gain (loss) on private equity investments Interest and dividends Gain (loss) on investments in equity securities Gain from changes in equity of an affiliated company PFG entities product sales PFG entities rental income Gain on sales of PFG entities Private equity entities product sales Other Total revenue Interest expense Net revenue Non-interest expenses: Compensation and benefits Commissions and floor brokerage Information processing and communications Occupancy and related depreciation Business development expenses PFG entities cost of goods sold PFG entities expenses associated with rental income Private equity entities cost of goods sold Other Total non-interest expenses Income (loss) from continuing operations before income taxes and cumulative effect of accounting change Income from discontinued operations before income taxes and cumulative effect of accounting change Income tax expense Income (loss) from continuing operations before cumulative effect of accounting change Gain on discontinued operations Cumulative effect of accounting change Net income (loss) Balance Sheets (Period End): Cash and cash deposits Loans and receivables Collateralized agreements Trading assets and private equity investments Other assets Total assets Short-term borrowings Payables and deposits Collateralized financing Trading liabilities Other liabilities Long-term borrowings Total liabilities Total shareholders’ equity Total liabilities and shareholders’ equity Cash Flows: Net cash provided by (used in) operating activities from continuing operations Net cash provided by (used in) investing activities from continuing operations Net cash provided by (used in) financing activities from continuing operations Effect of initial adoption of SOP 07-1 on cash and cash equivalents Effect of exchange rate changes on cash and cash equivalents Discontinued operations, net Net increase (decrease) in cash and cash equivalents FY 3/2002 3/2003 ¥ 140,001 75,255 109,985 162,228 232,472 500,541 (55,860) 3,504 294,931 177,053 116,324 — 68,965 1,825,399 504,048 1,321,351 379,540 20,962 87,252 73,787 26,652 200,871 111,529 — 247,786 1,148,379 172,972 — 4,926 168,046 — — ¥ 141,640 81,847 79,290 172,308 (14,391) 368,656 (41,288) — — — — 6,229 13,360 807,651 241,377 566,274 244,167 20,844 77,389 57,152 24,361 — — 4,968 89,984 518,865 47,409 — 37,295 10,114 — 109,799 ¥ 168,046 ¥ 119,913 ¥ 775,734 1,046,014 6,680,001 7,841,533 1,414,991 ¥ ¥ 17,758,273 629,279 1,251,592 9,087,597 2,693,746 518,156 1,972,974 16,153,344 1,604,929 ¥ 17,758,273 ¥ (1,170,028) (42,882) 1,052,851 — 13,018 — ¥ (147,041) ¥ 955,509 1,137,265 8,603,170 9,286,507 1,186,995 ¥21,169,446 343,837 ¥ 821,659 11,791,833 3,888,720 411,699 2,269,370 19,527,118 1,642,328 ¥21,169,446 ¥ 133,892 120,851 (111,189) — (8,952) — ¥ 134,602 *Calculated using the yen-dollar exchange rate of U.S.$1.00=¥99.85, the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal 42 Nomura Holdings, Inc. 3/2004 3/2005 3/2006 3/2007 ¥ 210,216 86,994 66,193 229,042 13,138 343,260 55,888 — — — — 17,640 23,565 1,045,936 242,833 803,103 259,336 19,169 80,031 54,221 23,100 — — 11,852 72,718 520,427 282,676 — 110,347 172,329 — — ¥ 221,963 92,322 78,452 201,686 7,744 401,379 15,314 — — — — 75,061 32,316 1,126,237 327,047 799,190 274,988 23,910 81,408 53,534 28,214 — — 44,681 87,620 594,355 204,835 — 110,103 94,732 — — ¥ 356,325 108,819 102,667 304,223 12,328 693,813 67,702 — — — — 88,210 58,753 1,792,840 647,190 1,145,650 325,431 32,931 89,600 55,049 32,790 — — 48,802 115,447 700,050 445,600 99,413 240,685 256,628 47,700 — ¥ 337,458 99,276 145,977 290,008 47,590 981,344 (20,103) — — — — 100,126 67,425 2,049,101 958,000 1,091,101 345,936 50,812 109,987 61,279 38,106 — — 57,184 106,039 769,343 321,758 — 145,930 175,828 — — ¥ Millions of yen 3/2008 404,659 85,096 189,712 61,720 76,505 796,540 (48,695) — — — — — 28,185 1,593,722 806,465 787,257 366,805 90,192 135,004 64,841 38,135 — — — 156,868 851,845 (64,588) — 3,259 (67,847) — — Millions of U.S. dollars* 3/2008 $ 4,053 852 1,900 618 766 7,978 (488) — — — — — 282 15,961 8,077 7,884 3,674 903 1,352 649 382 — — — 1,571 8,531 (647) — 32 (679) — — ¥ 172,329 ¥ 94,732 ¥00,304,328 ¥ 175,828 ¥ (67,847) $ (679) ¥ 930,637 1,013,636 12,881,752 13,838,396 1,088,545 ¥ ¥29,752,966 437,124 1,384,096 17,367,758 5,976,966 415,865 2,385,469 27,967,278 1,785,688 ¥29,752,966 ¥ (57,125) 20,971 201,267 — (18,978) — ¥ 1,047,234 1,221,083 14,389,045 15,600,521 2,230,970 ¥34,488,853 520,605 ¥ 963,965 21,666,185 5,332,173 1,309,944 2,827,552 32,620,424 1,868,429 ¥34,488,853 ¥ (360,780) (103,443) 448,531 — 13,697 (50,262) ¥01,555,636 1,363,681 17,027,807 13,697,441 1,381,470 ¥35,026,035 691,759 ¥ 1,239,731 20,263,012 6,527,627 641,980 3,598,599 32,962,708 2,063,327 ¥35,026,035 ¥ (565,214) (4,678) 829,219 — 16,419 131,100 ¥ 146,135 ¥ (52,257) ¥00,406,846 Reserve Bank of New York on March 31, 2008. ¥ 1,054,012 1,618,411 17,838,227 13,178,220 2,184,504 ¥35,873,374 ¥ 1,093,529 1,345,855 20,599,256 4,800,403 845,522 5,002,890 33,687,455 2,185,919 ¥35,873,374 ¥ (1,627,156) (533,813) 1,568,703 — 10,333 — ¥ (581,933) Millions of yen ¥ 1,434,067 1,872,027 10,391,367 10,656,505 1,944,832 ¥26,298,798 ¥ 1,426,266 1,328,698 10,540,731 5,154,369 636,184 5,224,426 24,310,674 1,988,124 ¥26,298,798 Millions of yen ¥ (647,906) (102,019) 942,879 (38,427) (57,319) — ¥ 97,208 S e v e n - Y e a r F i n a n c i a l S u m m a r y ( U . S . G A A P ) Millions of U.S. dollars* $ 14,362 18,748 104,070 106,725 19,478 $263,383 $ 14,284 13,307 105,566 51,621 6,371 52,323 243,472 19,911 $263,383 Millions of U.S. dollars* $ (6,488) (1,022) 9,443 (385) (574) — $ 974 Annual Report 2008 43 Major Subsidiaries and Affiliates As of July 1, 2008 Japan NOMURA SECURITIES CO., LTD. NOMURA ASSET MANAGEMENT CO., LTD. • Osaka Office • Fukuoka Office • Sendai Office THE NOMURA TRUST & BANKING CO., LTD. NOMURA CAPITAL INVESTMENT CO., LTD. NOMURA INVESTOR RELATIONS CO., LTD. NOMURA PRINCIPAL FINANCE CO., LTD. Americas NOMURA HOLDING AMERICA INC. NOMURA SECURITIES INTERNATIONAL, INC. • San Francisco Office • São Paulo Representative Office NOMURA CORPORATE RESEARCH AND ASSET MANAGEMENT INC. NOMURA FUNDS RESEARCH AND TECHNOLOGIES CO., LTD. NOMURA DERIVATIVE PRODUCTS, INC. NOMURA PENSION SUPPORT & SERVICE CO., LTD. NOMURA GLOBAL FINANCIAL PRODUCTS, INC. NOMURA BABCOCK & BROWN CO., LTD. NOMURA RESEARCH & ADVISORY CO., LTD. NOMURA BUSINESS SERVICES CO., LTD. NOMURA FACILITIES, INC. NOMURA INSTITUTE OF CAPITAL MARKETS RESEARCH JOINVEST SECURITIES CO., LTD. NOMURA HEALTHCARE CO., LTD. PRIVATE EQUITY FUNDS RESEARCH AND INVESTMENTS CO., LTD. Europe & Middle East NOMURA EUROPE HOLDINGS PLC (London) NOMURA INTERNATIONAL PLC (London) • Madrid Office • Vienna Representative Office NOMURA CODE SECURITIES LTD. (London) NOMURA BANK INTERNATIONAL PLC (London) • Italy Office BANQUE NOMURA FRANCE NOMURA NEDERLAND N.V. NOMURA BANK (LUXEMBOURG) S.A. NOMURA BANK (DEUTSCHLAND) Gmbh MAINTRUST KAG NOMURA BANK (SWITZERLAND) LTD. • Geneva Office NOMURA ITALIA S.I.M.p.A. NOMURA FUNDS RESEARCH AND TECHNOLOGIES AMERICA, INC. NOMURA INTERNATIONAL TRUST COMPANY NOMURA SECURITIES (BERMUDA) LTD. NOMURA CANADA INC. NOMURA REALTY ADVISORS, INC. NOMURA ASSET MANAGEMENT U.S.A. INC. NOMURA GLOBAL ALPHA LLC Instinet INSTINET, INC. Asia & Oceania NOMURA ASIA HOLDING N.V. NOMURA INTERNATIONAL (HONG KONG) LIMITED • Seoul Branch Office • Taipei Branch Office • Hanoi Representative Office NOMURA FUTURES (HONG KONG) LIMITED NOMURA SECURITIES (HONG KONG) LIMITED NOMURA ASIA LIMITED NOMURA SINGAPORE LIMITED NOMURA SECURITIES (SINGAPORE) PTE. LTD. NOMURA FUTURES (SINGAPORE) PTE. LTD. NOMURA MALAYSIA SDN. BHD. NOMURA AUSTRALIA LIMITED NOMURA SECURITIES PHILIPPINES, INC. P.T. NOMURA INDONESIA NOMURA CORPORATE ADVISORY (CENTRAL EUROPE) Private Company LTD. (Budapest) CAPITAL NOMURA SECURITIES PUBLIC COMPANY LIMITED (Bangkok) NOMURA CORPORATE ADVISORY (CENTRAL & EASTERN EUROPE) Sp.z.o.o. (Warsaw) NOMURA CORPORATE ADVISORY (SHANGHAI) CO., LTD. NOMURA (CIS) LIMITED (London) • Moscow Office NOMURA INVESTMENT BANKING (MIDDLE EAST) B.S.C. (c) (Bahrain) NOMURA FUNDING FACILITY CORPORATION (Dublin) NOMURA GLOBAL FUNDING PLC (London) NOMURA EUROPE FINANCE N.V. (Amsterdam) NOMURA STRUCTURED HOLDINGS PLC (Dublin) NOMURA PRINCIPAL INVESTMENT PLC (London) NOMURA EUROPEAN INVESTMENT LIMITED (London) NOMURA ASSET MANAGEMENT U.K. LIMITED NOMURA FUNDS RESEARCH AND TECHNOLOGIES CO., LTD., London Branch Office 44 Nomura Holdings, Inc. NOMURA FINANCIAL ADVISORY AND SECURITIES (INDIA) PRIVATE LIMITED NOMURA ASSET MANAGEMENT SINGAPORE LIMITED NOMURA ASSET MANAGEMENT MALAYSIA SDN. BHD. NOMURA ASSET MANAGEMENT HONG KONG LIMITED NOMURA ASSET MANAGEMENT CO., LTD., Seoul Representative Office Nomura Securities Domestic Network As of July 1, 2008 Kinki Kanto Akashi Branch Daito Branch Esaka Branch Gakuenmae Branch Higashiosaka Branch Himeji Branch Hirakata Branch Ibaraki Branch Kishiwada Branch Kobe Branch Kurakuen Branch Kyoto Branch Nanba Branch Nara Branch Nishinomiya Branch Okamoto Branch Osaka Branch Otsu Branch Sakai Branch Senri Branch Takarazuka Branch Takatsuki Branch Tennoji-eki Branch Toyonaka Branch Tsukaguchi Branch Uehonmachi Branch Umeda Branch Wakayama Branch Kyoto Branch, Kyoto Station Building, The Cube Office (Opening in August) Umeda Branch, Diamor Office (Opening in July) Chugoku Fukuyama Branch Hiroshima Branch Kurashiki Branch Matsue Branch Okayama Branch Shimonoseki Branch Tokuyama Branch Yonago Branch Kyushu Fukuoka Branch Kagoshima Branch Kitakyushu Branch Kumamoto Branch Kurume Branch Miyazaki Branch Nagasaki Branch Oita Branch Saga Branch Sasebo Branch Aobadai Branch Atsugi Branch Chiba Branch Fujisawa Branch Funabashi Branch Futamatagawa Branch Hiratsuka Branch Ichikawa Branch Kamakura Branch Kashiwa Branch Kawagoe Branch Kawaguchi Branch Kawasaki Branch Kofu Branch Konandai Branch Koshigaya Branch Kumagaya Branch Matsudo Branch Mito Branch Odawara Branch Omiya Branch Omiya Nishiguchi Branch Ota Branch Sagamihara Branch Saitama Branch Shiki Branch Shinyokohama Branch Shinyurigaoka Branch Takasaki Branch Tama Plaza Branch Tokorozawa Branch Totsuka Branch Tsuchiura Branch Tsurumi Branch Urawa Branch Utsunomiya Branch Yachiyodai Branch Yokohama Branch Yokohama Bashamichi Branch Yokohama-eki Nishiguchi Branch Yokosuka Branch Hokuriku Fukui Branch Kanazawa Branch Niigata Branch Toyama Branch Hokkaido Asahikawa Branch Hakodate Branch Kushiro Branch Sapporo Branch Tohoku Akita Branch Aomori Branch Fukushima Branch Hachinohe Branch Koriyama Branch Morioka Branch Sendai Branch Yamagata Branch Shikoku Kochi Branch Matsuyama Branch Takamatsu Branch Tokushima Branch Chubu Gifu Branch Hamamatsu Branch Kanayama Branch Kariya Branch Kasugai Branch Matsumoto Branch Nagano Branch Nagoya Branch Nagoya-ekimae Branch Numazu Branch Okazaki Branch Shizuoka Branch Toyohashi Branch Toyota Branch Tsu Branch Yokkaichi Branch Tokyo Metropolitan Area Chofu Branch Fuchu Branch Gotanda Branch Hachioji Branch Hamadayama Branch Hatagaya Branch Head Office Iidabashi Branch Ikebukuro Branch Ikebukuro Metropolitan Plaza Branch Jiyugaoka Branch Kamata Branch Kanda Branch Kichijoji Branch Kinshicho Branch Koishikawa Branch Koiwa Branch Kojimachi Branch Kokubunji Branch Machida Branch Mita Branch Nakameguro Branch Nakano Branch Nerima Branch Ogikubo Branch Omori Branch Sakurashinmachi Branch Sangenjaya Branch Seijo Branch Senju Branch Shibuya Branch Shinbashi Branch Shinjuku Branch Shinjuku-eki Nishiguchi Branch Shinjuku Nomura Building Branch Tachikawa Branch Tamagawa Branch Tanashi Branch Tokyo Branch Toranomon Branch Ueno Branch Denenchofu Branch (Opening in July) M a j o r S u b s i d i a r i e s a n d A f f i l i a t e s / N o m u r a S e c u r i t i e s D o m e s t i c N e t w o r k Okinawa Naha Branch Annual Report 2008 45 Corporate and Other Data Corporate Data Date of Incorporation December 25, 1925 Head Office 1-9-1, Nihonbashi, Chuo-ku, Tokyo 103-8645, Japan Share Data Common Stock Issued 1,965,919,860 shares (As of March 31, 2008) Listings The common shares of Nomura Holdings are listed on the Tokyo, Osaka, Nagoya, and Singapore stock exchanges. The shares are also listed on the New York Stock Exchange in the form of American Depositary Receipts. (As of March 31, 2008) Securities Code 8604 (Tokyo Stock Exchange) NMR (New York Stock Exchange) Number of Shareholders 263,427 (Unit shareholders: 239,339) (As of March 31, 2008) Major Shareholders (Top 10) (As of March 31, 2008) Paid-in Capital ¥182.8 billion (As of March 31, 2008) Group Employees 18,026 (As of March 31, 2008) Transfer Agent and Registrar Mitsubishi UFJ Trust and Banking Corporation Corporate Agency Department: +81 (3) 5391-1900 Depositary for American Depositary Receipts (ADRs) The Bank of New York Mellon Depositary Receipts Division: +1 (866) 680-6825 http://www.adrbnymellon.com Ratio: 1 ADR = 1 ordinary share Shares Held (Thousand Shares) Percentage of Issued Shares (%) 120,113 6.11 Component Ratio of Shareholders Financial Institutions Individuals and Others (%) 100 8.47 Foreign Legal Entities Other Legal Entities Securities Firms 8.88 8.09 7.28 7.25 Ranking Shareholder Name Japan Trustee Services Bank, Ltd. (Trust Account) The Master Trust Bank of Japan, Ltd. (Trust Account) State Street Bank and Trust Company Hero & Co.* 115,525 75,485 53,896 State Street Bank and Trust Company 505103 37,230 Japan Trustee Services Bank, Ltd. (Trust Account 4) The Chase Manhattan Bank, 385036 Nippon Life Insurance Company Trust & Custody Services Bank, Ltd. (Investment Trust Account) 32,938 21,017 19,007 16,680 01 02 3 04 05 06 07 08 09 10 5.88 3.84 2.74 1.89 1.68 1.07 0.97 0.85 The Sumitomo Trust and Banking Co., Ltd. (Trust Account B) 16,653 0.85 Note: The Company had 57,887 thousand shares of treasury stock (ranked 4th if included). * The fourth-largest shareholder, Hero & Co., is the former Depositary Nominees Inc., following a name change. Date of Record for Dividend Payments First Quarter Second Quarter Third Quarter Year-end June 30 September 30 December 31 March 31 Dividend Payment September 1 Date* December 1 March 1 (of following calendar year) June 1 * If the payment date falls on a weekend or Japanese national holiday, the dividend will be paid on the next business day. Other Credit Ratings* Nomura Holdings Long-term Short-term Nomura Securities Long-term Short-term S&P Moody’s R&I JCR A- A 3 AA- AA A-2 — a-1+ — * As of June 30, 2008. A A2 AA- AA A-1 P-1 a-1+ — 46 Nomura Holdings, Inc. 80 60 40 20 0 21.58 1.10 24.61 0.83 22.73 0.93 22.00 24.50 1.23 1.08 40.44 37.90 43.66 44.06 39.75 28.40 27.77 24.60 25.43 27.42 3/2004 3/2005 3/2006 3/2007 3/2008 Auditor Ernst & Young ShinNihon LLC For More Information Investor Relations Department Nomura Holdings, Inc. Otemachi Nomura Building 2-1-1, Otemachi, Chiyoda-ku, Tokyo 100-8170, Japan Tel.: +81 (3) 5255-1000 www.nomuraholdings.com/investor/ Nomura Holdings Website Top Page www.nomura.com News Release Subscription Services Our e-mail alert service informs subscribers when a news release is issued or new content is uploaded to our website. News Click here to see the latest news releases, including the quarterly earnings reports of Nomura Holdings. Investor Relations www.nomuraholdings.com/investor/ Financial Information Presentations Annual Reports C o r p o r a t e a n d O t h e r D a t a Annual Report 2008 47 A n n u a l R e p o r t 2 0 0 8 Create Change. World-Class. Speed. A n n u a l R e p o r t 2008for the Year Ended March 31, 2008 FSC certified paper is used for the main body of this annual report. Printed using soy inks. Printed in Japan 

Continue reading text version or see original annual report in PDF format above