Sun, Aug 2, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Nomura’s profits dampen by more focus on hedge funds

Thursday, February 04, 2010
Opalesque Industry Update - Nomura, one of the major financial groups of Japan and country’s leading brokerage saw net revenue of Y274.5bn ($2.95bn), and net income of 10.2bn yen ($110m) for the third-quarter of FY ending 31-March 2010 (see Nomura’s release here).

Revenue from its capital-markets business fell 6.1% to Y163.9bn ($1.8bn) from Y174.5bn ($1.92bn) in the second quarter as investors such as hedge funds booked profits following a lucrative year, the WSJ reported yesterday. A slowdown in client trading also affected results.

Nomura’s hedge fund-centric approach may have impacted the financial performance. In 2008, Nomura bought the European and Asian arms of Lehman Brothers Holdings Inc to mould its business model in similar way to that of American and European brokerages, that is, to give a greater focus on hedge fund clients.

Although this strategy helped in mid-2009 when bid-offer spreads that banks earn on trades widened, and helped Nomura recover from a loss in the fiscal year ended Mar-09, analysts believe that bid-offer spreads will not widen again to the same extent, even when trading activity pick up again as hedge funds start reopening trading positions.

As the financial crisis had created room for new players to serve hedge funds, Siggi Thorkelsson, Nomura's head of equities Asia-Pacific, told Reuters in an interview on July-09 : "We think prime brokerage is a very interesting opportunity because of what happened in the industry this past year."

The Nomura group is quite keen on US expansions as the chief executive of Nomura America Holding, Shigesuke Kashiwagi told the WSJ: "The U.S. market has been our missing part of the puzzle, and we are determined to fill that gap." In Jan-10, the company appointed a US head of investment banking.

The group has ambitious targets. Speaking to Global Pensions, senior investment officer and managing director of fixed income Yoshihiro Namura said: "We'd like to develop our own capabilities in all key areas. We are an equity house, a fixed income house and we'd like to build out global credit, global equity, and emerging market equity.”

A strong performance in investment-banking, helped the brokerage to post a net profit in Q3, compared with a loss of Y342.9bn ($3.77bn) a year earlier, during the financial crisis.

Investment Banking booked net revenue of Y44.5bn ($500m) in this quarter. Nomura advised on many of the high-profile equity finance deals in Japan during the quarter. In addition to its dominant position in Japan, Nomura acted as Joint book-runner on the IPO of Maxis, Malaysia's leading mobile communications service provider, and sole book-runner for a convertible bond issue by Tata Power, the largest domestic private utility player in India, the news release said.

However, for this Q3 of FY ending 31-March 2010, profit fell below the profit forecast of Y26.1bn ($0.28bn).

Nomura sprung into action by cutting costs by Y24.5bn ($0.27bn) in the quarter through compensation costs reduction to 46% of net revenue from 49% in the second quarter of the same fiscal year. – written by SC –


Bg

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Opalesque Exclusive: Despite bumpy June/July, CTAs hold on[more]

    Bailey McCann, Opalesque New York: To say that things have been rocky in managed futures recently is putting it mildly. In June, the industry saw its worst month on a performance basis in the past four years. Then yesterday,

  2. Investing - Hedge fund billionaires bet on London as revival gathers pace[more]

    From Bloomberg.com: London’s fund industry is bouncing back, and U.S. billionaires Steven A. Cohen and Ken Griffin are grabbing a piece of the action. Griffin’s Citadel and Millennium Management, a hedge fund run by Israel Englander, have bulked up in London, where asset growth is outpacing the U.S.

  3. Other Voices: Same day reporting and the evolving role of fund administrators[more]

    By: Scott Price, Head of Business Development and Client Management for North America, Maitland Ernst & Young’s latest glob

  4. Cowen Group, Inc. to acquire Conifer Securities[more]

    Cowen Group, Inc. and Conifer Securities, LLC had announced the signing of a definitive agreement under which Cowen will acquire Conifer Securities, the prime services division of Conifer Financial Services LLC. The transaction, the terms of which have not yet been disclosed, was approved by the boa

  5. Cargill’s Black River Asset to shut down four hedge funds[more]

    Komfie Manalo, Opalesque Asia: Cargill Inc.’s $7.4 billion Black River Asset Management said it was closing four hedge funds with a combined $ 1 billion in assets and start returning investors money over the next several months, various media said. The hedge funds represent 15% of Black River’

 

banner