Nomura Cuts 400 MBS/Fixed Income Jobs
Nomura Cuts 400 MBS/Fixed Income Jobs due to MBS/CDS losses.
Bloomberg News, AP TOKYO: Nomura Holdings, the largest Japanese brokerage, said Monday that it would shut down its mortgage-backed securities business in the United States, the latest casualty of the subprime mortgage crisis...
Nomura Holdings a casualty of US subprime crisis
Nomura Holdings, the largest Japanese brokerage, said Monday that it would shut down its mortgage-backed securities business in the United States, the latest casualty of the subprime mortgage crisis that is rippling across the globe.
The securities company said that it would post its first quarterly pretax loss in more than four years after losing ¥73 billion, or $620 million, on U.S. home loans.
Nomura will cut 400 jobs in the United States and report a ¥40 billion to ¥60 billion pretax loss for the fiscal second quarter, it said in a statement to the Tokyo Stock Exchange. It will record ¥15 billion in costs related to closing the U.S. residential mortgage division.
"This is extremely regrettable," the company's chief executive, Nobuyuki Koga, said at a press briefing in Tokyo. "The pace of the collapse in the U.S. residential mortgage-backed securities market was quicker than we expected."
The loss marks the latest setback for Koga's plan to expand outside Japan and reduce Nomura's reliance on an economy that has suffered three recessions in the past 16 years.
Nomura sold $1.7 billion of U.S. subprime mortgages at a loss in the past six months as delinquencies on home loans rose to a five-year high. Koga said that he would slash his own pay by 30 percent.
Christian Takushi, who manages Japanese equities at Swisscanto Asset Management in Zurich, said: "I have been very disappointed over the years at the way the top management plays the global approach.
"This is what happens when a Japanese company rushes into something and then rushes out of it."
Nomura signaled in July that it would pull out of the U.S. subprime market, and Monday's announcement takes the first-half loss at the unit to ¥104 billion. It stopped buying subprime loans - mortgages to less creditworthy borrowers - and repackaging them as securities after the business lost ¥31.2 billion in the first quarter.
The company's shares have fallen 15 percent since the end of March, and closed ¥10 lower at ¥2,080 in Tokyo.
The news marks one of the first verifications that Japanese companies have also suffered as a result of the weakening U.S. housing market.
Goldman Sachs Group, the world's biggest securities firm, said last month that it had $1.48 billion of losses for marking to market the value of noninvestment grade credits. Lehman Brothers Holdings and Bear Stearns each recorded $700 million of losses on markdowns of mortgage securities and leveraged loans, and Morgan Stanley's totaled $877 million. All of those firms are based in New York.
Nomura may post a second-quarter net loss, said the company's chief financial officer, Masafumi Nakada. The job cuts will reduce annual costs by ¥25 billion, the company said. Yasuo Agemura, the head of global markets, will be replaced by Akira Maruyama.
Koga, the chief executive, said in July that he would carry out a "drastic overhaul" in the United States after cutting 105 jobs during the previous quarter. Nomura slashed its U.S. subprime loan portfolio to ¥100 million as of Monday, from ¥71.1 billion in the end of June, Monday's statement said.
Nomura received about 85 percent of its revenue from Japan in 2006, with U.S. operations providing 8.5 percent and Europe about 5.4 percent.
Nomura's profit almost quadrupled to ¥76.7 billion in the three months ending June 30 as fees from asset management jumped 60 percent. Brokerage commissions for stock, bond and investment trusts also rose.
In August, Mitsubishi UFJ Financial Group, Japan's biggest bank by market value, Mizuho Financial Group and six rivals reported combined losses of ¥18.7 billion linked to investments backed by subprime loans.
The disclosures represent less than 0.2 percent of their combined holdings of asset-backed bonds as of March 31, according to documents on their Web sites.
Mitsubishi UFJ said in a September U.S. filing that it may have to revalue securities holdings at a "significantly lower price" because of credit-market turmoil triggered by subprime mortgage defaults in the United States.
Award winning services for graduate students and business professionals.
Member Rewards
posted by Victor Lloyd Smith @ 2:18 PM
0 Comments:
Post a Comment
<< Home