Japan's top broker Nomura Holdings posted a large loss today because of turmoil in world markets and warned that it could suffer further due to exposure to Iceland's financial meltdown.
Nomura, which is buying the Asian and European operations of troubled Wall Street bank Lehman Brothers, reported a first-half net loss of 149.5 billion yen ($1.57 billion), against a year-earlier profit of 64.2 billion. In the fiscal second quarter alone it lost 72.9 billion yen.
'The management regrets that the company posted losses for three consecutive quarters. We feel a sense of crisis and are now trying to break through this situation,' said Nomura chief financial officer Masafumi Nakada.
He said earnings were hit by the collapse of Lehman Brothers, which sparked chaos on global financial markets.
Nomura said it may also lose money on its $425m exposure to Iceland, whose once booming financial sector has collapsed under the weight of the worldwide credit crunch.
The global financial crisis led to a decline in commissions for brokerage services and sales of investment trusts, Nomura said.
'Governments and central banks have implemented measures to manage the global financial crisis, but share prices and currency levels continued to be unstable even in October,' said Nakada.
Japanese financial firms are believed to be less exposed to losses related to troubled US mortgage loans compared with many Western banks. But they are being squeezed by weak markets and a Japanese economy on the brink of recession.
Despite its financial troubles, Nomura moved swiftly to snap up Lehman businesses outside of the US after the once-mighty Wall Street bank was brought down by the financial crisis that has rocked world markets.
Nomura also revealed today that the total cost of acquiring the Lehman's operations in the Asia-Pacific, Europe and the Middle East would be about $2 billion. The key goal was to bring on board Nomura's workers in Asia, Europe and the Middle East, said Nakada.
The Japanese company took over more than 8,000 staff of Lehman Brothers' Asia-Pacific, Middle East and European operations as well as of its Indian IT subsidiaries. The broker said that more than 95% of former Lehman employees had accepted its offer of employment.
