Nomura weighs return to prime brokerage four years after Archegos

Japan Times

25-04-2025

Nomura is weighing a return to offering cash prime brokerage services in the United States and Europe, businesses it largely exited just four years ago following the implosion of Archegos Capital Management.
As part of the push, Nomura hired Matias Bercun, a 17-year veteran of Barclays, to run the prime brokerage business globally, according to people familiar with the matter. Nomura officials have already held discussions with regulators in Japan about its latest plans, the people said, asking not to be named discussing non-public information.
Executives are hoping the expanded offering will help the division generate more than $1 billion in annual revenue, the people said. That would be more than three times what the bank currently makes from the business.
A spokesperson for Nomura declined to comment.
Prime brokerage, which involves banks lending cash and securities to hedge funds, has become an increasing money maker for Wall Street in recent years due to high equities prices and the growth of multi-strategy hedge funds. Industrywide revenue from the business hit a record $27 billion in 2024, up about 13% from a year earlier, according to data from Crisil Coalition Greenwich.
The moves are the latest sign that Nomura is looking to deepen its foothold in its traditional Wall Street businesses, which have been buoyed by resurgent markets in Japan in recent quarters. Christopher Willcox, who heads the Tokyo-based firm's trading and investment banking units, got $12 million in compensation for the year ended March — a figure that meant his pay was more than triple that of Chief Executive Officer Kentaro Okuda.
Nomura in 2021 began informing clients it would pull back from certain parts of the prime business after it suffered some of the biggest losses during the collapse of Archegos. The bank ultimately recorded a $2.9 billion hit tied to the implosion.
Nomura's loss on Archegos, a little-known firm set up to manage the fortune of trader Bill Hwang, occurred after a series of internal missteps. Officials allowed Archegos to become the single biggest client of the prime brokerage unit and charged him billions of dollars less than the bank's own guidelines suggested while warnings about potential risk failures at the division weren't acted on, it was reported in 2023.
Willcox took over as head of Nomura's investment banking division in the wake of Archegos and helped oversee improvements in the bank's risk controls. In a Jan. 2024 interview, he said the firm had made "enormous improvements' and "I think we can say we've put Archegos behind us.'
To be sure, Nomura never got out of the prime business completely. There was no change to its offerings in Asia and the company continued to have hedge fund clients in the U.S. and Europe, offering them prime-related services including equity finance, cross asset financing and synthetic prime brokerage.
With Bercun, though, those efforts will be more formal, and he will take over responsibilities previously fulfilled by Simon Yates, global head of equities. Bercun will report to Yates in the new role.
The company has also recently added BNP Paribas' Oliver Jacomb as head of prime sales for Europe, the Middle East and Africa.
Nomura is wading deeper into prime at a time when the business is attracting scrutiny from regulators around the world.
The Bank of England, for instance, recently announced its planning to investigate how banks measure their exposures within their prime brokerage divisions after the business has grown more concentrated in recent years.
That work was a result of an ongoing, industrywide review by the central bank's Prudential Regulatory Authority (PRA), which was prompted by several major events that rocked markets in recent years, including the collapse of Archegos. The PRA investigators have, at times, been accompanied by regulators at the Federal Reserve and other counterparts from watchdogs around the world, it was previously reported.