Nomura Holdings Inc. said it could incur a substantial loss from its dealings with a U.S. client, sending shares in the Japanese investment bank tumbling and forcing it to pull a large bond sale.
The bank didn’t name the client, but its disclosure followed turbulent trading on Wall Street involving forced sales of stockholdings by a large, low-profile U.S. investment firm. In recent days, Archegos Capital Management, run by former Tiger Asia manager Bill Hwang, has liquidated positions approaching $30 billion in value, The Wall Street Journal has reported.
Nomura said an event on March 26 could “subject one of its U.S. subsidiaries to a significant loss arising from transactions with a U.S. client.” The bank said it was evaluating the extent of any loss and the impact on results.
It estimated the claim against its client at $2 billion, based on Friday’s market prices, and said that could change depending on market moves and how transactions were unwound.
Given the bank’s high capital buffers–it had a common-equity tier 1 ratio of more than 17% as of end of December–there “will be no issues related to the operations or financial soundness of Nomura Holdings or its U.S. subsidiary,” it said.
Shares in Nomura fell 15.2% to 611.30 yen per share in the Monday-morning trading session in Tokyo. That put the stock on course for its biggest single-day loss since 2009, Refinitiv data showed. The drop cut Nomura’s market value by nearly $3.1 billion to $17.1 billion, according to FactSet.
Nomura on Monday also scrapped its planned sale of $3.25 billion of dollar bonds, after fixing terms on the three-part bond offering last week. It said it planned to sell similar debt once it had grasped and disclosed the effects of the U.S. episode.