Nomura’s Archegos Blast Induces Growth Dilemma for Japan Inc.


With just a few days left in the Japanese financial year, the entire staff of Numura’s empire became confident about a decent bonus after a long stretch of belt-tightening last week.

Japan’s largest brokerage posted in February Third-quarter highest profit in 15 yearsIt was announced in October The best first half numbers in two decades And a cost-cutting program before scheduling.

Critically, it recorded the third quarter in its infamous volatile international operations, as a star performer as a U.S. actor. The image of a fast, bold, global turnaround for Numura CEO Kentaro Okuda since April 2020 was particularly lucrative, and it was the first to draw from the investment banking department with an external focus. Perhaps this was the end of Nimu’s long days Accident run, Both externally imposed and self-damaged?

But last Monday, Namura warned that it had suffered a potential loss of 2 2 billion In an incident involving an unnamed client, the bankers later identified the U.S.-based fund as Archegos. Nimura is set to wipe out profits for the second half of the year. Bonus hope, the voice of bankers, seems to be isolated again. Namura is not alone, and it quickly became clear that other banks – most notably, Credit Suisse, which could top ক্ষতি 4 billion in losses – were caught in the blast. Two mega banks in Japan have been opened. Mitsubishi UFJ says it could lose $ 270m, Although people close to Mizuho say it could face similar hits.

This raises a number of questions about the combined mountain of profits raised by multiple banks throughout the Archegos without the clarity of accurately determining the risk. The legitimacy of how large investment positions can be effected through the use of a few such derivatives may increase the pressure for regulatory change. Banks worldwide, for the eighteenth time, may be committed to new frameworks of risk control.

However, there is a special echo of this phenomenon. As a cutthroat competitor like Goldman Sachs and Morgan Stanley, such costs at least stemmed from thin trading operations in the United States.

Known criticism of the accident-prone nature of the bank has re-emerged. Surprised by its past crises and evils, the failed Lehman Brothers operations in 2008 were not a catastrophic purchase. However, some of the blockades before Archegos defined not only Namura and Japan’s finance sector, but also the country’s hesitant corporate expansion. Base. Japanese companies have to go global but often Hafzard is a globalizer.

Consider the major contributors to what was on the track as far as Archegos on the way to the great revival year of Numura. Its U.S. operations were fierce, with other international activities contributing a record 42 percent to the group’s profit in the December quarter. And the group underestimated the consultative work for Japanese companies ’huge outbound M&A contracts.

It was fighting the right fight, but as seen, without the necessary firepower. In principle, Japanese companies know that they must do it, no matter how obvious the risks are, and taking it seriously increases competition to manage without any particular global outlook on life. Hence the big M&A spray. Japan’s population is shrinking and long-term growth for many companies can only be generated abroad, but Kirin Sudden pullout From Myanmar and Tokyo Marines Embroidery in Greensil Dominance The latest example of Japanese firms through an Australian subsidiary where global expansion has been feared.

Nomura, the aging – and dying – domestic customer base, has a clear urgency behind the pursuit of international profits that the company has achieved a historic historical tendency to take risks. Mitsubishi UFJ and Mizuho’s foreign activities are more ambiguous, although the underlying pressures are similar. But the need for profit and being able to make them safe is a different matter.

Numura’s problem is an intense version of the issue shared with many Japanese companies that reached the top of the world rankings in the late 1980s, but never used their top spot for the necessary management and muscle development needed for globalization. Now there is no other way but to globalize Numura and others, this supervision is moving towards accountability.

leo.lewis@ft.com



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