Nomura puts Archegos hit at $2.9 billion, affirms commitment to U.S. business

TOKYO (Reuters) -Nomura Holdings Inc said it would incur $2.9 billion worth of pain from the collapse of U.S. investment fund Archegos but added that while it was beefing up risk controls, it had no plans to scale back its U.S. business.

Taking the second-largest hit from the Archegos debacle after Credit Suisse, Japan’s biggest brokerage and investment bank posted a fourth-quarter net loss of around $1.4 billion, its largest quarterly loss since the 2008 global financial crisis.

Some $2.3 billion in Archegos-related losses were booked in the quarter while another $570 million will be logged this financial year.

Last month’s implosion of Archegos, a family office run by Bill Hwang that failed to meet margin calls on heavily leveraged stock bets, has rekindled tough questions about whether Nomura has what it takes to achieve its goal of breaking into the top league of global investment banks by expanding in the United States.

But Nomura said Archegos was an isolated incident.

“We are not planning to make major changes to our global business strategy,” Nomura CEO Kentaro Okuda told a media briefing. “We will work to build a solid U.S. platform while enhancing risk management.”

Nomura said it has exited over 97% of its Archegos-related positions and a full review of its prime brokerage and other financing-related businesses had found no other similar cases. It also has no plans to shy away from business with family offices who remain important clients, it added.

On Monday it announced it would beef up its U.S. management team with the appointment of Christopher Willcox, the former head of JP Morgan Asset Management, as co-CEO of the group’s holding company for the Americas.

Before Archegos’ collapse, Nomura had been on track for record annual profit, bolstered by a buoyant U.S. trading business. That was set to have been a hard-fought victory in its decade-long, stop-start efforts to successfully expand outside Japan.

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