Nomura Exits US Residential Mortgage-Backed Securities Business
Tokyo, October 15, 2007 – Nomura Holdings, Inc. today announced its exit from the US residential mortgage-backed securities (RMBS) market.
During the second quarter the company moved aggressively to reduce its US Residential Mortgage exposure from 266bn (US$2.3bn)1 to approximately ¥48.0bn (US$409m). Nomura's remaining Residential Mortgage exposure now stand at just ¥14.0bn (US$119m), about ¥100m (US$1m) of which is subprime related.
Nomura's exit from the RMBS business is part of an ongoing reorganization of the group's US operations. As part of this reorganization, Nomura expects to cut regional headcount from about 1,300 at the end of March to about 900, and to reduce annual expenses by approximately ¥25bn (US$213m).
The restructuring will result in a total charge of about ¥15bn (US$128m). Of this, approximately ¥10bn (US$85m) will be booked in the second quarter on top of losses from the RMBS business of around ¥73bn (US$621m). As a result, Nomura expects to post a consolidated pre-tax loss in the second quarter of around ¥40bn-¥60bn (US$340m-US$511m).
"Nomura has faced challenges in the US residential mortgage-backed securities market which have led to these disappointing results," said Nobuyuki Koga, President and CEO. "However, we have moved decisively to deal with the issue and have avoided further and protracted losses by taking firm and immediate action. This draws a line under the residential mortgage-backed securities problem.
"We remain strongly committed to the US and to the development and growth of profitable operations that reflect our core competencies," said Mr. Koga.
Ends
*1
US dollar amounts are included solely for the convenience of the reader and have been translated at the rate of 117.50 yen = 1 US dollar, the noon buying rate in New York for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York on October 12, 2007. This translation should not be construed to imply that the yen amounts actually represent, or have been or could be converted into, equivalent amounts in US dollars.
Notes to editors:
Nomura Group
Nomura is a global financial services group dedicated to providing a broad range of financial services for individual, institutional, corporate and government clients. The Group offers a diverse line of competitive products and value-added financial and advisory solutions through its global headquarters in Tokyo, over 150 branches in Japan, and an international network in 30 countries; with regional headquarters in Hong Kong, London, and New York. The Group's business activities include investment consultation and brokerage services for retail investors in Japan, and, on a global basis, brokerage services, securities underwriting, investment banking advisory services, merchant banking, and asset management. For further information about Nomura please visit our website at www.nomura.com.
Nomura is providing this preliminary information relating to its second quarter prior to the scheduled financial highlights announcement date in light of the recent market events. The operating results for the first half of the fiscal year ending March 31, 2008, will be disclosed on the 25th of October.
Certain statements in this release are forward-looking statements. Forward-looking statements are statements that are not historical facts, and they include statements about management's beliefs and expectations. These statements are based on plans, estimates and projections as they are currently available to management. By their nature, forward-looking statements involve uncertainties, and therefore, actual results may differ materially from those included in these statements. Such uncertainties include, but are not limited to, financial market volatilities, economic and market conditions in the global capital markets, and actions taken by current and potential competitors.
