Nomura Archegos’ losses were $ 2.9 billion when the main brokerage was suspended

Nomura said the losses from the implosion of Archegos Capital will be nearly $ 2.9 billion, as people close to the Japanese bank have said they have permanently suspended their chief mediation operations.

The economic blow to the country’s biggest brokerage Nomura is more than a loss of approximately $ 2 billion initially marked when the mishap caused by the powerful family office appeared in late March.

Bill Hwang’s loss of Archegos, which has not been officially named by the nominee and calls him a “U.S. customer,” has pushed the bank to bear the biggest quarterly loss since the 2008 global financial crisis. He also called for a commitment that Nomura would strengthen its risk management systems.

Two people close to Nomura said that as a result of the Archegos incident, the company has definitively suspended Dougal Brech, who fed Hwang as a client in the UK and was the head of the first brokerage unit working at Credit Suisse. . The Japanese bank said on Tuesday that it did not plan major strategic changes to locate its main brokerage business in the wholesale banking unit.

Swiss bank UBS also said on Tuesday He lost $ 774 million Of the occupations associated with Hwang’s fund, eliminating a strong set of earnings in the first quarter, the bank’s net income rose 14 percent from a year earlier to $ 1.8 billion.

Nomura’s success in the fall of Archegos is just the second time Credit Suisse has been revealed $ 4.7 billion loss from a blow to the family office earlier this month. Morgan Stanley and Japan’s two largest megabank have also been successful.

Nomura’s losses left a $ 2.3 billion disturbance in the March 31 closing ceremony. But the process of dissolving Archegos ’positions, which Nomura said accounted for 97 percent, has generated an additional loss of $ 570 million, analysts said. has hurt its performance in the quarter ending June.

They have revived questions that have prompted the Japanese bank to take more risks than whether it has pushed its efforts to achieve foreign growth, due to the relatively small scale of US operations.

Nomura said Tuesday that Christopher Willcox, former head of JPMorgan Asset Management, has been named chief executive officer of his U.S. unit.

Concerned about whether the scale of funding provided to other family offices has also been extended to Archegos, Nomura said in a presentation along with the results that it has conducted a full review of existing brokerage transactions. “Guk. . . it has examined positions related to financing from other businesses that confirm that they do not have any other similar transactions, ”the presentation said.

The net loss of 155 155.4 thousand ($ 1.4 million) in the January-March quarter shattered Nomura’s expectations of what would be a record year of profit, largely driven by high business returns that were historically volatile in the U.S.

Without the fall of Archegos, investors said, the bounce of Nomura in 2020 would be the start of Kentaro Okuda’s dreams. The former head of investment banking started a year ago as CEO and was the first head of the company to step out of the home brokerage business.

Instead, the announcements of Okuda’s first full year results began with an apology and a commitment to improving risk management.

Nomuran’s net full-year profit, which ended in March, was $ 1.4 million, 29 percent less than the 2019 tax. Although the wholesale business was successful, year-over-year profits in the retail and asset management segments for Nomura grew by 87 percent and 158 percent, respectively. year by year, respectively.

Shunsaku Sato, chief credit officer of Moody’s Japan rating agency, said these gains “highlighted the importance of both segments in making important contributions to stabilizing the company’s overall profitability.”