Article: Nomura CEO’s Honeymoon Ends With $2 Billion Archegos Debacle

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Nomura CEO’s Honeymoon Ends With $2 Billion Archegos Debacle

Takashi Nakamichi and Takako Taniguchi,  31 March 2021

Nomura Holdings Inc.’s chief executive officer was having a bumper inaugural year in charge — until a U.S. family office spoiled the party.

Just days before Kentaro Okuda’s first anniversary as head of Japan’s biggest brokerage, the company warned of a “significant” loss from an unnamed U.S. client. That’s tied to the massive unwinding of leveraged bets by Bill Hwang’s Archegos Capital Management, according to people familiar with the matter.

The debacle triggered a record 16% drop in Nomura’s shares on Monday, wiping $3.5 billion from its market value and threatening a turnaround executives had hoped would herald a new era of more sustainable profits. Instead, a $2 billion claim on a single client risks largely erasing Nomura’s pretax profits for the second half of the year ending March 31, according to a Jefferies Financial Group report.

“Nomura may still have a lot to learn from other companies about how to control loss limits,” said Hideyasu Ban, an analyst at Jefferies in Tokyo. “It’s hard to deny that their top management has responsibility for what’s happened.”

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