Nomura appoints ex-JP Morgan banker as Co-CEO of Americas holding firm
TOKYO (Reuters) – Nomura Holdings Inc said on Monday it will appoint Christopher Willcox as Co-CEO of the group’s holding company for Americas as Japan’s biggest brokerage and investment bank aims to beef up its U.S. management.
Willcox, former CEO of JP Morgan Asset Management, will work with Yo Akatsuka, who will remain as CEO of Nomura Holding America Inc. His appointment is effective May 3.
(Reporting by Makiko Yamazaki, editing by Louise Heavens)
Fears for Nomura fixed income bonuses after Archegos loss
Nomura’s loss on the unwinding of its exposure to Archegos Capital Management has come at a rather awkward moment for traders at the Japanese bank. While most European and all U.S. banks have already paid bonuses for last fiscal year, Nomura’s fiscal year ended only yesterday – two days after the bank announced the “possible loss” of $2bn, seemingly courtesy of Bill Hwang.
Nomura’s bonuses are typically announced in May, so the Japanese bank now has an entire month to recalibrate the bonus pool for its wholesale banking division. After an excellent year – at least until March 29th – traders at the bank will have been hopeful that they would get paid.
Nomura declined to comment on likely impact of the $2bn loss on its bonus pool. Coincidentally, in the nine months to January 31st 2020, the Japanese bank’s wholesale banking division made a profit of 230bn yen, which works out at around $2bn. – The implication is that profits for the full nine months could have been wiped out.
This matters, because Nomura’s fixed income staff – like many others on the Street – had a great 2020-2021. Revenues in the fixed income division rose nearly 80%, versus a 50% increase in Nomura’s equities sales and trading revenues. Nomura’s macro traders in particular, had their best quarter ever in the three months to October 2020.
In theory, the $2bn loss is ascribable to the U.S. equities business, and should be contained there. However, its magnitude may make this wishful thinking. Nomura has made various major hires to its London macro trading business under Steve Ashley in recent years – including, most recently FX star and veteran Kevin Connors, who is expected to build out a team. This could be harder to achieve if Nomura gets cold feet about trading risk, or cuts bonuses to the bone.
Nomura Warns of ‘Significant’ Loss From Unnamed U.S. Client
Nomura Holdings Inc. said it may have incurred a “significant” loss arising from transactions with a U.S. client, sending its stock tumbling the most in more than nine years.
The estimated amount of the claim against the client is about $2 billion based on market prices as of March 26, the Japanese brokerage said in a statement on Monday. It didn’t name the customer.
Nomura is evaluating the extent of the possible loss and the impact it could have on the group’s results. The Tokyo-based firm also canceled plans to sell dollar-denominated bonds.
While the Nikkei newspaper reported that the losses arose at its U.S. prime brokerage, it wasn’t immediately clear whether they were tied to the massive margin call that roiled U.S. markets on Friday. Archegos Capital Management, the family office of former Tiger Management trader Bill Hwang, was forced by its banks to sell more than $20 billion worth of shares after some positions moved against him, Bloomberg reported.
Shares of Nomura fell as much as 15% on Monday morning in Tokyo, the biggest intraday decline since November 2011. The stock has climbed 29% in the past 12 months.
The potential loss would blemish a bumper year for Japan’s biggest securities firm, which has benefited from a boom in trading and investment banking during the pandemic. Nomura’s profit jumped to the highest in 19 years in the nine months ended December.
Nomura said the estimate of the claim against the client may change depending on unwinding of the transactions and market price fluctuations. It will continue to take steps to address the issue and make a further disclosure once the impact of the potential loss has been determined.
(Updates with Nikkei report in the fourth paragraph)
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