Latest news with #Archegos
Japan Times
25-04-2025
- Business
- Japan Times
Nomura weighs return to prime brokerage four years after Archegos
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.
Business Times
25-04-2025
- Business
- Business Times
Nomura weighs deeper foray into prime brokerage four years after Archegos
[LONDON] Nomura Holdings is weighing a return to offering cash prime-brokerage services in the US 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 sources familiar with the matter. Nomura officials have already held discussions with regulators in Japan about its latest plans, the sources said, asking not to be named discussing non-public information. Executives are hoping the expanded offering will help the division generate more than US$1 billion in annual revenue, the sources 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 US$27 billion in 2024, up about 13 per cent 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 US$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. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Nomura in 2021 began informing clients it would pullback 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 US$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 US dollars less than the bank's own guidelines suggested while warnings about potential risk failures at the division were not acted on, Bloomberg 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 January 2024 interview with Bloomberg, he said the firm had made 'enormous improvements' and 'I think we can say we have 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 US 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. Regulatory scrutiny Nomura is wading deeper into prime at a time where 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, Bloomberg has previously reported. BLOOMBERG
Reuters
06-02-2025
- Business
- Reuters
Nomura is on the cusp of its promised re-invention
MUMBAI, Feb 6 (Reuters Breakingviews) - Kentaro Okuda promised to reinvent Nomura (8604.T), opens new tab when he took the top job at the Japanese bank almost five years ago. It's starting to look like he has kept his word. His next job is to convince investors that the overhaul is sustainable - and that the $20 billion firm won't walk into another scandal. Nomura on Wednesday reported a bumper final three months of 2024, with net profit doubling, opens new tab to 101.4 billion yen ($664 million) compared with the same period the previous year. Helping Japanese companies strike deals fired up its investment bank, which helped the bank generate an annualised 11.8% return on equity, a similar showing to the previous quarter after years of sub-par performance. That's also powering its other two main divisions, wealth management and investment management. But Nomura is not just winning in Japan: nearly 40% of total pre-tax income came from overseas, up from 23% a year ago. Such double-digit returns are on the surface a throwback to Nomura's results in 2020. But Okuda has diversified the firm since then to make its trading business less dependent on rates. He has also built up more recurring revenue in wealth management. Overall, he has largely stuck to his early pledges to bulk up less volatile businesses. What's less clear is whether the bank has made enough progress to deliver its desired minimum 8% return on equity if the external environment sours - and if it can sustain its recent outperformance when markets remain supportive. Nor is it clear if Okuda can keep the bank out of trouble. Hedge fund Archegos's 2021 blowup cost the bank billions of dollars. In November, he took a pay cut following a bond trading scandal. On Wednesday, the bank acknowledged that the arrest of a former employee on suspicion of attempting to murder an elderly couple who were clients was having a slight impact on securing new customers. Nomura trades at 0.8 times the estimated book value for the next 12 months, per LSEG data, up slightly from this time last year. That suggests investors think last quarter's performance is a blip, notwithstanding the 7% rise in its shares on Thursday. Okuda will need a few quarters of consistency without further incidents before shareholders give the bank more credit for its transformation. Nomura, Japan's biggest brokerage and investment bank, on February 5 reported third-quarter net profit of 101.4 billion yen ($662 million) for the three months to the end of December, a 101% increase from the same period in the previous year. The results beat the mean estimate of analysts compiled by Refinitiv. Net revenue rose 25% over the same period to 502 billion yen. Nomura's shares rose nearly 7% to 1,068 yen apiece in morning trading on February 6. For more insights like these, click here, opens new tab to try Breakingviews for free. Editing by Antony Currie and Aditya Srivastav
