Nomura, the Japanese investment bank that has crowed about avoiding damage from the financial crisis, has unveiled a record 343bn yen (£2.7bn) quarterly net loss as it was hit by exposure to Iceland, Bernard Madoff and the cost of its Lehman Brothers acquisition.
The bank is to axe its dividend for the current quarter, cut executive pay and consider selling businesses to cope with the damage caused by 240bn yen of one-off losses and costs.
Nomura bought Lehman's Asian, European and Middle East operations four months ago. At the time it boasted that having avoided mistakes made by US rivals it was ready for a big push in international investment banking. But the bank has had to lay out large sums to retain Lehman bankers and absorb other costs as the intensity of the financial crisis triggered biglosses on investments and reduced revenue at its major business units.
Japan's biggest bank booked a 32.3bn yen loss linked to Mr Madoff's alleged investment fraud, a 43.1bn yen loss on Icelandic bank bonds and 60.3bn yen of costs related to Lehman that will be repeated this quarter. It also suffered 150bn yen of trading losses, including on US mortgage-backed securities, monoline insurers and leveraged loans – the same positions that inflicted damage on its rivals earlier in the crisis. Revenue plunged by 99 per cent to 2.7bn yen, with brokerage commissions dropping 29 per cent as investors fled the stock market.
Standard & Poor's cut credit ratings for Nomura, citing the bigger-than-forecast losses and the burden of rising costs from the Lehman acquisition.
The bank will not pay bonuses to 20 top executives, and cut their monthly pay by up to 30 per cent to cut costs.
Nomura shares, down 59 per cent in the past year, closed up 4.9 per cent before the results were released.Reuse content