Nomura Holdings, Japan's largest brokerage firm, recorded the highest profit of the last ones four years and the sixth quarter of growth, thanks mainly to whale-sale activity, which rose to a nine-year high. The results that could mitigate the recent scandal for which the company had to pay a substantial fine and temporarily lost its status as a primary dealer on the government bond market, reports Reuters.
The Scandal: Bond Price Manipulation, Robbery, Attempted Murder
Scandals have multiplied at Nomura, founded in Osaka in 1925. Last Thursday thebanking regulator inflicted a sanction of 21,8 million yen (equivalent to $143.000) after an investigation found that a trader manipulated the price of government bond futures contracts to 10 years in March 2021. The investigative branch of Japan's Financial Services Agency said the Nomura trader had placed misleading orders, giving the false impression of significant supply or demand, without actually having the intention of buying or selling anything. The real intention was instead to execute operations in reverse compared to what is indicated in the order book: a practice that the authority has defined as "layering“, a type of “spoofing".
THEimpact on quarterly results, due to the loss of primary dealer activity and the loss of customer confidence, it was limited for now and Nomura did it know that will assess any further impact and will provide appropriate explanations, Chief Financial Officer Takumi Kitamura said at a results press conference.
Nomura's reputation could be further tarnished, however, after media reports on Thursday reported thatArrest of a former employee is preferably used for robbery and attempted murder of two elderly clients. The man, 29, was working for Nomura Securities when the alleged crime occurred last July in Hiroshima: he is suspected to have drugged a customer and his wife, stole 26 million yen (about 157 euros) in cash from their home and set it on fire. The couple, both in their 80s, escaped and were safe. A spokesperson for Nomura Holdings confirmed that the suspect was a former employee who was fired for disciplinary reasons, without specifying when he worked for the bank. “It is extremely regrettable that a former employee of ours has been arrested,” the spokesperson said, adding that the company will have to assess the impact on its overall business, but declined to comment further as the case is under investigation.
In any case, in response to the scandal, Nomura he promised to Strengthen internal controls and said that they were adopted “strict disciplinary measures"Against the traders and managers concerned. According to what has been reported, several senior executives will voluntarily accept a 20% salary reduction for two months.
The Archegos Capital case cost $2,9 billion
The Japanese giant had already lost $2,9 billion after stumbling on the hedge fund's bankruptcy Archegos Capital. Nomura itself (along with Credit Suisse) had been hit by the collapse of hedge fund Archegos Capital Management, which cost it $2,9 billion. Okuda tried to weather the crisis four years ago when he took over as CEO, setting himself the goal of doubling pretax profits by 2031.
The highest profit in the last 4 years thanks to wholesale
THENet income amounted to 98,4 billion yen ($645 million) in the July-September quarter, compared with 35,2 billion yen in the same period a year earlier. The results mark the recovery of the wholesale segment Nomura, which has long been posting disappointing results, saw its pre-tax profit exceed that of its wealth management business for the first time in two years. “I think our efforts over the past few years to increase and diversify revenue streams while controlling costs are showing up in the numbers,” Kitamura said.
The wholesale business, which includes global markets And services of investment banking, has been boosted by a series of deals in Japan, as well as tight cost controls. Like many financial firms, Nomura is pushing harder into wealth management to generate stable commission-based profits, less influenced by swings in market sentiment. This business saw its highest pre-tax profit in nine years.
