Nomura weighs deeper foray into prime brokerage four years after Archegos
As part of the push, Nomura hired Matias Bercun, a 17-year veteran of Barclays, to run the prime brokerage business globally, according to sources familiar with the matter. Nomura officials have already held discussions with regulators in Japan about its latest plans, the sources said, asking not to be named discussing non-public information.
Executives are hoping the expanded offering will help the division generate more than US$1 billion in annual revenue, the sources said. That would be more than three times what the bank currently makes from the business.
A spokesperson for Nomura declined to comment.
Prime brokerage, which involves banks lending cash and securities to hedge funds, has become an increasing money maker for Wall Street in recent years due to high equities prices and the growth of multi-strategy hedge funds. Industrywide revenue from the business hit a record US$27 billion in 2024, up about 13 per cent from a year earlier, according to data from Crisil Coalition Greenwich.
The moves are the latest sign that Nomura is looking to deepen its foothold in its traditional Wall Street businesses, which have been buoyed by resurgent markets in Japan in recent quarters. Christopher Willcox, who heads the Tokyo-based firm's trading and investment banking units, got US$12 million in compensation for the year ended March – a figure that meant his pay was more than triple that of chief executive officer Kentaro Okuda.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
Nomura in 2021 began informing clients it would pullback from certain parts of the prime business after it suffered some of the biggest losses during the collapse of Archegos. The bank ultimately recorded a US$2.9 billion hit tied to the implosion.
Nomura's loss on Archegos, a little-known firm set up to manage the fortune of trader Bill Hwang, occurred after a series of internal missteps. Officials allowed Archegos to become the single biggest client of the prime-brokerage unit and charged him billions of US dollars less than the bank's own guidelines suggested while warnings about potential risk failures at the division were not acted on, Bloomberg reported in 2023.
Willcox took over as head of Nomura's investment-banking division in the wake of Archegos and helped oversee improvements in the bank's risk controls. In a January 2024 interview with Bloomberg, he said the firm had made 'enormous improvements' and 'I think we can say we have put Archegos behind us'.
To be sure, Nomura never got out of the prime business completely. There was no change to its offerings in Asia and the company continued to have hedge fund clients in the US and Europe, offering them prime-related services including equity finance, cross asset financing and synthetic prime brokerage.
With Bercun, though, those efforts will be more formal, and he will take over responsibilities previously fulfilled by Simon Yates, global head of equities. Bercun will report to Yates in the new role.
The company has also recently added BNP Paribas' Oliver Jacomb as head of prime sales for Europe, the Middle East and Africa.
Regulatory scrutiny
Nomura is wading deeper into prime at a time where the business is attracting scrutiny from regulators around the world.
The Bank of England, for instance, recently announced its planning to investigate how banks measure their exposures within their prime brokerage divisions after the business has grown more concentrated in recent years.
That work was a result of an ongoing, industrywide review by the central bank's Prudential Regulatory Authority (PRA), which was prompted by several major events that rocked markets in recent years, including the collapse of Archegos. The PRA investigators have, at times, been accompanied by regulators at the Federal Reserve and other counterparts from watchdogs around the world, Bloomberg has previously reported. BLOOMBERG
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CNA
5 hours ago
- CNA
In labour-starved Japan, workers land another bumper pay hike
TOKYO :Japanese companies agreed to raise wages by an average 5.25 per cent this year, their biggest pay hike in 34 years and the third straight year of robust growth as they grapple with severe labour shortages and seek to shield workers from inflation. The final figure tallied on Thursday by the Rengo labour union group - Japan's largest with 7 million members - follows an increase of 5.10 per cent last year and 3.58 per cent the year before - a sharp contrast to prior decades of stagnant wages. Japan's biggest business lobby Keidanren also said on Thursday that the average summer bonus payment at major companies this year increased 4.37 per cent from the previous year to a record 990,848 yen ($6,889). Rapidly ageing Japan has developed an extreme labour crunch with shortages among non-manufacturers and small firms reaching historic levels, even pushing some into bankruptcy. A Reuters survey published in January showed that two-thirds of Japanese companies believe that labour shortfalls were seriously or fairly seriously affecting their businesses. Whereas workers around the world are unhappy about high levels of inflation, the Japanese now have much more bargaining power. "There is an emerging consensus among companies that a pay raise that exceeds inflation is a must," a government official said on condition of anonymity. "It's the new norm now." Inflation in Japan, as measured by the core consumer price index, which excludes volatile fresh food prices, is currently around 3.7 per cent. Fresh food prices have also risen steeply, causing much angst among consumers. Steady wage hikes are crucial for sustaining a consumption-led recovery - a prerequisite for the Bank of Japan to resume interest rate hikes. Mizuho Research & Technologies predicts wages will increase 4.7 per cent next year, assuming oil prices will weaken and help cushion the impact that U.S. tariffs are likely to have on corporate profits. "As wage hike momentum is likely to be confirmed in January-March, we expect the BOJ to start raising interest rates during that quarter," said Saisuke Sakai, chief Japan economist at Mizuho Research. That view is reasonably widespread with a slight majority of economists in a Reuters poll expecting the BOJ's next 25-basis-point increase to come in early 2026. Toru Suehiro, chief economist at Daiwa Securities, similarly predicts an average wage hike of 4.5 per cent to 4.9 per cent next year but notes that Japan's non-manufacturers will have to step up and take on a leading role in raising pay as manufacturers will be hit by U.S. tariffs. "Wage growth in recent years was led by manufacturers which benefited from a weak yen, but now it's going to have to work differently," he said. Trade talks between the U.S. and Japan have hit roadblocks and U.S. President Donald Trump has threatened to impose a tariff of 30 per cent or 35 per cent on Japanese imports, well above the 24 per cent rate he announced on April 2 and then paused until July 9.
Straits Times
6 hours ago
- Straits Times
60 S'pore firms to get AI boost from Tata Consultancy as it launches a new innovation centre here
Sign up now: Get ST's newsletters delivered to your inbox (From left) TCS Pace global head Leena Walavalkar, High Commissioner of India Shilpak Ambule, TCS Ppresident for growth markets Girish Ramachandran, Minister of State for Trade and Industry Alvin Tan, TCS chief technology officer Harrick Vin, TCS Singapore country head Punit Agarwal, TCS chief technology officer Michele Lemmens at the launch of the new facility on July 3. SINGAPORE - Up to 60 local SMEs and start-ups are getting an AI boost from India's largest IT services provider Tata Consultancy Services (TCS) with its launch of a high-powered innovation centre in Singapore. The new facility, located within TCS Asia Pacific's office at Changi Business Park, will allow the firm's customers and partners – including up to 50 small and medium-sized enterprises and 10 start-ups in the next 12 months – to work with its experts to co-develop, prototype and scale AI solutions for real-world business challenges. TCS also plans to hire up to 50 fresh graduates from local universities in roles such as data science and cyber security to support the centre's operations. The company has 6,600 employees in Singapore. TCS declined to disclose the facility's cost or size, but said it plans to expand it in the first half of 2026. Mr Punit Agarwal , TCS Singapore country head, told The Straits Times on July 3 that SMEs here typically do not have access to top consulting talent for tech, but the new centre will be able to help bridge that gap. 'SMEs may not be as tech-savvy as larger corporations, but our consultants can guide them in understanding their data, learning how to use AI, and assessing their existing tech stack to identify what needs to be modernised,' he said. Mr Agarwal also noted that the centre will serve as a platform for fintech firms and start-ups to showcase their products and join TCS' Co-Innovation Network – a global ecosystem that connects emerging tech companies with TCS' enterprise customers worldwide. 'The centre will bring together our deep domain and contextual knowledge of customer business and cutting-edge technologies from Google, Nvidia and other technology partners to deliver impactful outcomes for business in Singapore,' he said. At the launch ceremony for the new innovation centre on July 3 , Minister of State for Trade and Industry Alvin Tan said Singapore will continue to deploy and develop digital AI solutions with digital and local players. He noted that TCS's new innovation centre will play a similar role to the $150 million Enterprise Compute Initiative (ECI) announced in the 2025 Budget, which helps Singapore-based companies gain access to cloud resources, AI tools and consultancy services. 'It will partner with local and global corporates to advance their digital transformation – by connecting businesses including start-up s, academia, and government agencies, the centre will drive cross-sector innovation and collaboration,' he said. Headquartered in Mumbai, TCS established its operations in Singapore in 1985. The firm, which specialises in IT services, consulting and business solutions, has a presence in 55 countries worldwide.
Business Times
6 hours ago
- Business Times
World Banks sees more monetary easing in Thailand as risks mount
[BANGKOK] The World Bank expects Thailand's monetary stance to become 'more accommodative' this year amid mounting external and domestic uncertainty, including a political crisis that's seen the temporary suspension of Prime Minister Paetongtarn Shinawatra. Falling inflationary pressures may also open up room for further easing, although it underscores persistent demand-side weaknesses and the need for structural reforms to raise productivity and investment, the Washington-based lender said in a report on Thursday (Jul 3). The Bank of Thailand has slashed its key interest rate by a cumulative 75 basis points since October to 1.75 per cent to cushion the blow to the economy from the fallout of global trade tensions and an uncertain growth outlook. It has also left the door open for further easing. 'With rising domestic and external uncertainty, as well as falling inflationary pressure, the monetary stance is projected to become more accommodative in 2025,' the World Bank said. 'However, a faster than-expected monetary easing to counter external headwinds could delay household debt reduction and pose risks to financial stability.' Thailand was plunged into a political crisis this week with a court suspending Paetongtarn until it ruled on allegations of ethical misconduct against her. The political turmoil has sparked fears of a government collapse, a budget delay and the government's ability to negotiate down the threat of a 36 per cent US tariff on exports, which could jeopardise the country's already fragile economic situation. The World Bank has slashed Thailand's growth estimates to 1.8 per cent in 2025 and 1.7 per cent in 2026 from 2.5 per cent in 2024. The downgrades reflect recent global trade policy shifts, weakening exports, slowing consumption and moderating tourism recovery, it said. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up The escalation of trade tensions and slower-than-expected recovery in tourism can dampen exports and services growth, the bank said. The political uncertainty could result in delays of next year's fiscal budget and public infrastructure investments implementation with spillovers into private investment and overall growth, it said. Still, growth can hit 2.2 per cent this year if trade tensions cool and private investment grows moderately. Domestically, effective implementation of fiscal stimulus and high-quality infrastructure investment could support growth, according to the report. The World Bank said digital technology can be a catalyst for Thailand's growth and create more jobs, deliver better services and boost productivity in the face of uncertainty. The nation's digital economy is estimated to contribute around 6 per cent of gross domestic product and is the second-largest in South-east Asia. Financial services, digital payments, fintech, and software and engineering industries, have seen some of the fastest rates of job creation over the past decade, according to the World Bank. 'By leveraging digital technologies and fostering an environment conducive to innovation and growth, Thailand can raise its growth trajectory and accelerate towards high-income status, ensuring higher value-added jobs and social equity for its citizens,' the bank said. BLOOMBERG
