Shinsei Bank To Cut Quarter Of Its Brokerage Staff

TOKYO (Reuters) – Japan’s Shinsei Bank (8303.T) will cut about a quarter of the staff at its brokerage, or roughly 30 employees, sources with knowledge of the matter said on Wednesday.

The bank aims to reduce Shinsei Securities to around 85 people by the end of March, said the two sources, who spoke on condition of anonymity because the information is not yet public.

Shinsei, about one-third owned by U.S. buyout firm JC Flowers & Co, has said it will return to a lower-risk business model focused on domestic lending, after taking heavy losses on subprime loans and other overseas investments.

The brokerage had been active in the securitisation of real-estate loans, which it would then market to institutional clients in Japan.

Now it is looking to focus more on retail customers, the sources said, by offering investment products linked to equities or overseas currencies.

Shinsei will offer early retirement packages to about 30 employees, although it is unknown how many will take the offer. The cuts will not be in any specific department, but across the brokerage, the sources said.

A spokesman for Shinsei, James Seddon, said the bank did not comment on personnel changes.

Shinsei, which has lost money for the past two quarters, warned this month that it expected to swing to a net loss of 48 billion yen ($521 million) for the year to March.

After several years of placing bets on risky overseas assets, the bank is now aiming to strengthen its domestic, retail business.

Former chief Masamoto Yashiro returned to the bank’s top spot in November after his successor, Thierry Porte, stepped down to take responsibility for Shinsei’s poor performance.

Yashiro has said improving risk management is a top priority.

He has said the bank’s corporate business will no longer stress overseas investments and proprietary trading and earlier this year named a former banker from BNP Paribas (BNPP.PA) as head of risk management.

The bank is also betting on the domestic consumer finance market. Last year it acquired General Electric’s (GE.N) Japanese consumer finance business for 580 billion yen.

Shinsei is not the only midsized Japanese bank to refocus on the domestic market after taking heavy hits overseas.

Rival Aozora Bank (8304.T) warned last week its annual net loss would widen to $2.1 billion and it replaced its chief executive.

Both Shinsei and Aozora have their roots in banks nationalised during Japan’s banking crisis, and both were later sold to foreign funds and renamed. The two have yet to full repay their bailout money, making their poor performance a sore subject in Japan.

Shares of Shinsei finished down 3.9 percent at 98 yen ahead of the news on Wednesday. Tokyo’s bank index .IBNKS.T dropped 1.9 percent.

(Reporting by David Dolan; Editing by Hugh Lawson)