By Thomas Wilson and Emi Emoto
TOKYO (Reuters) - Japan's SMBC Nikko Securities, a unit of bank Sumitomo Mitsui Financial Group <8316.T>, is setting up a niche investment banking team in New York, its chief said, testing the waters of global finance just as domestic rival Nomura scales back.
The team will focus on mergers and acquisitions and then debt capital markets in business areas where the brokerage's parent has strong historical links, SMBC Nikko President and Chief Executive Yoshihiko Shimizu said in a recent interview.
The team will grow to around 10 members by March next year, said Shimizu, a 38-year veteran of Japan's banking industry but newly installed at the head of Japan's third-biggest brokerage by assets.
"We're going ahead in the industries where we're strong, where we've got a strong entrance ticket," said Shimizu, referring to sectors including pharmaceuticals, raw materials and technology. "We'd be foolish if we didn't use those links."
The move comes despite headaches Japan's financial institutions have experienced in trying to make money overseas. Earlier this week, Nomura Holdings Inc <8604.T>, Japan's largest brokerage, began a partial exit from businesses in the Americas and the closure of its equities research unit in Europe after losing $3 billion overseas in almost six years.
The move is the first time SMBC Nikko will offer dedicated M&A coverage in the United States since its precursor Nikko Cordial Securities Inc was sold by Citigroup (C.N) to Sumitomo Mitsui Banking Corp in 2009. Former Barclays [BARCR.UL] banker Randy Gelber will lead the New York team.
Breaking into the top 10 of U.S. M&A league tables would be "difficult", said Shimizu, who took the reins at SMBC Nikko this month. But the 60-year-old executive said he wants to see the company ranked among the top 10 in debt capital markets within three years.
In Japan, SMBC Nikko ranks third behind rivals Nomura and Daiwa Securities Group <8601.T>. Between March-December last year it managed 44.6 trillion yen ($407 billion) of assets.
(Reporting by Thomas Wilson and Emi Emoto; Editing by Kenneth Maxwell)