Saturday, April 26, 2008

By KANAKO TAKAHARA

Staff writer

Nomura Holdings Inc. said Friday it booked a group net loss of ¥67.8 billion in the business year ended in March due to losses related to U.S. subprime mortgage loans and falling stock prices.

The loss is a far cry from the previous year, when the nation's largest brokerage took in ¥176 billion in profits.

Because of the credit crunch in the U.S., Nomura was blindsided by the deteriorating state of monoline insurers it had hired to hedge its risk.

Monoline insurers provide insurance for trillions of dollars in bonds.

One of the monoliners faltered so badly that Nomura needed to set aside about ¥132 billion in the January-March quarter, forcing the brokerage to post a net loss.

But Nomura hinted that it would not need to book big losses in the future, having already set aside a big chunk of capital in the business year that ended in March.

"We've done everything possible at this moment based on accounting regulations," said Masafumi Nakada, Nomura's chief financial officer. "We've taken a conservative stance."

Nomura's sales dropped 22.2 percent to ¥1.59 trillion while pretax profit was ¥64.6 billion, down from ¥321.8 billion the same period last year.

In addition to the ¥132 billion it set aside, Nomura said it booked a total loss of ¥130 billion in securities products related to the subprime mortgage loan in business 2007.

The falling profits dealt another blow to Nomura, which saw one of its employees arrested on Wednesday on charges of insider trading.

Nakada began the news conference by bowing deeply and apologizing for the insider trading allegation.

"We deeply apologize for causing such a situation," he said. "We will do our utmost to regain customer confidence."

Nomura set up a special committee Friday of two outside board members and a lawyer to investigate information management in the investment banking section and come up with measures to prevent a recurrence.

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