Bloomberg News

Nomura Said to Reduce European Assets Since End of September

December 06, 2011

(Adds Moody’s review from third paragraph.)

Nov. 28 (Bloomberg) -- Nomura Holdings Inc. reduced its assets linked to Greece, Ireland, Italy, Portugal and Spain by 75 percent since September, a person with direct knowledge of the matter said.

Japan’s largest brokerage cut the value of debt, derivatives and counter-party agreements in those nations by the end of last week from $3.55 billion as of Sept. 30, the person said, declining to be identified before a public announcement. The total for Italy was reduced by 80 percent, the person said.

Investors have driven Nomura’s shares down 53 percent this year as losses from overseas operations mounted and on concern that the Tokyo-based brokerage’s European holdings may lead to wider losses. Nomura is cutting jobs and slashing costs by $1.2 billion as it seeks to avert a potential downgrade by Moody’s Investors Service.

The reported holdings are mostly trading assets that are marked to market, the person said. Keiko Sugai, a Tokyo-based spokeswoman for the company, declined to comment.

Banks around the world are sounding their loudest warnings yet that the euro area risks unraveling unless its guardians quickly intensify efforts to beat the two-year sovereign debt crisis. Economists from Morgan Stanley, UBS AG, Nomura and other banks said over the past week that governments and the European Central Bank must step up their crisis response.

Shares of Nomura rose 4.4 percent to 240 yen in Tokyo Stock Exchange trading today, while Japan’s benchmark Topix Index advanced 1.3 percent.

European Sovereign Debt

Government bonds accounted for 74 percent of the $3.55 billion linked to the five European nations as of Sept. 30, according to a statement issued by the brokerage on Nov. 1. Financial institutions consisted of 20 percent and corporates 6 percent, it had said.

More than 80 percent of the amount matures by the end of March 2012, while Italy accounted for 79 percent, Nomura had said at that time.

Moody’s on Nov. 9 said it may lower the brokerage’s credit rating after reviewing losses from its capital markets activities and the brokerage’s expense-reduction program. The exposure to Europe’s most troubled nations “appears manageable, and has not been a rating driver for the review,” the rating company said at that time.

Nomura on Nov. 1 posted a 46.1 billion yen ($593 million) loss for the three months ended Sept. 30 as pretax losses from overseas operations swelled to 52.4 billion yen, the biggest in at least six quarters. The net loss was Nomura’s first in more than two years, prompting the company to triple a target for cost cuts with most of the reductions slated for Europe.

--Editors: James Gunsalus, Chitra Somayaji

To contact the reporter on this story: Takahiko Hyuga in Tokyo at thyuga@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net


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