Nomura extends prime broker woes

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The logo of Nomura Securities is seen at the company's Head Office in Tokyo, Japan, November 28, 2016. REUTERS/Toru Hanai

HONG KONG, July 7 (Reuters Breakingviews) - Nomura’s (8604.T) shareholders are getting a flashback to March’s Archegos fiasco. The Japanese investment bank lost $2.9 billion from the U.S. fund’s implosion. Now it’s closing read more parts of its prime-brokerage division that was at the centre of the mess – but not the actual units responsible.

Up for the chop are the U.S and European units that deal in cash stocks for hedge funds, Reuters and Bloomberg have both reported. But it seems Nomura boss Kentaro Okuda is keeping the equity derivatives operations which helped Archegos over-leverage itself.

Granted, the closures are small and won’t materially affect the bank’s bottom line. Yet Nomura’s shares fell 1.4% on the news and are down almost a quarter from pre-Archegos levels. Cash prime brokerage is less profitable than offering clients stock exposure via derivatives, but it is less risky. The shares’ latest drop suggests investors are not yet confident that Nomura has fully put its prime-brokerage woes behind it. (By Jennifer Hughes)

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Editing by Antony Currie and Katrina Hamlin

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