Nomura Reports $ 2 Billion Loss, Cancels Bond Issue; stocks fall

TOKYO (Reuters) -Nomura Holdings Inc on Monday reported a possible loss of $ 2 billion in a US subsidiary, prompting Japan’s largest brokerage and investment bank to put aside a hefty bond issue and to bring down its action the most in more than a decade.

Nomura’s stock was greeted with a deluge of sell orders as the market opened, pushing its price down 16% at the start of trading.

The firm in a statement said the $ 2 billion hit came from transactions with a US customer. He based the estimate on market prices as of March 26 and said it could change depending on the outcome of trades and market fluctuations.

The announcement came after a series of block transactions in the United States on Friday that investors said caused stock prices to drop for many companies. The deals were linked to the sale of stakes by Archegos Capital Management, a person with knowledge of the matter told Reuters.

Nomura’s loss was linked to the Archegos transactions, Bloomberg reported, citing people familiar with the matter, one of whom said Archegos was a primary client of Nomura’s brokerage.

Reuters calls to the Archegos New York office after hours Sunday local time went unanswered. Nomura declined to comment on any relationship with Archegos.

TRUST

Nomura said it is assessing the impact of the potential loss on its consolidated results for the year ending March 31 – scheduled for release on April 27 – and would cancel the planned $ 3.25 billion issue. of senior tickets.

“As long as these losses are one-off in nature, H1 FY3 / 22 should be the time of recovery, so the impact on the longer-term outlook is relatively limited,” Jefferies analysts wrote in a note to research.

Last month, Nomura expressed confidence in continued high profits after posting a 23% year-on-year increase in net profit from April to December to 308.5 billion yen ($ 2.82 billion), after posting its best third quarter in 15 years in strong global markets and investments. banking.

Recent performance has been driven by its US business, which includes investment banking and stock and bond trading.

“Nomura Holdings should be able to absorb losses of this size,” a broker told Reuters, declining to be identified as they were not authorized to speak to the media.

“This raises the question of whether there are any losses at other Japanese investment banks that just haven’t been disclosed yet, but at this point it looks like this issue is only affecting Nomura. It is not something that will bring down the entire stock market. “

Chief Cabinet Secretary Katsunobu Kato said on Monday that the government would closely monitor the situation and the Financial Services Agency would share information on the matter with the Bank of Japan.

(1 USD = 109.5300 yen)