Nomura (NMR) Reports a $2.3 Billion Charge from Archegos, Expects a Further $570 Million Hit in 2021

The Japanese financial titan Nomura (NYSE: NMR) reported a $2.3 billion charge to its Q1 earnings from the liquidation of the US hedge fund Archegos. The company expects the total charge to increase to nearly $2.9 billion this financial year, it said.

“We take the matter with the US client very seriously. We remain committed to strengthening management and enhancing our risk management framework as we continue to build our operating platform to deliver consistent earnings across our global franchise,” the company said in a statement.

Still, the Archegos incident won’t prompt the bank to change its practices, meaning the bank sees this as an isolated incident. Given the overall business strength, shares gained over 2% in Tokyo’s trading session today.

"We are not planning to make major changes to our U.S. and global business strategy," Nomura CEO Kentaro Okuda told a media briefing.

The Archegos hit pushed the company to report the biggest quarterly net loss since the 2008 global financial crisis. Nomura posted a net loss of 155.4 billion yen ($1.4 billion), which is much worse than the pandemic-driven loss of 34.4 billion reported a year ago.

Net income came in at 153.1 billion yen, representing a plunge by 29% from a year ago, and lower than analysts’ estimates ranging between 160 billion and 225 billion yen.

Similar to Credit Suisse, which has been the biggest casualty of the Archegos blowup, Nomura also said it was on track to record profits boosted by US trading business.

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