Japanese banking group Nomura has reported major losses for the second quarter of 2008 and has warned its management, staff and investors that in acquiring parts of the stricken US bank Lehman Brothers it’s taking a big risk.
Nomura has acquired the Lehman Brothers IT divisions, as well as investment divisions in the Asian Pacific and European markets.
Nomura announced today that it lost $763 million (Y72.9 billion) in the second quarter, a figure which does not include the costs involved in acquiring the Lehman Brothers assets. In a statement to investors Nomura said it was taking on a significant risk by acquiring Lehman Brothers during an economic downturn. Nomura has reported a loss for the last three quarters.
The bankruptcy of Lehman Brothers has lost Nomura Y17bn. The Japanese banking group has seen its investment banking revenue fall by 82 per cent from the previous quarter.
A significant cost to Nomura in acquiring Lehman Brothers is the staffing levels, 95 per cent of the Lehman employees have agreed to stay with the global bank, increasing the Nomura staff by 3,000.
Nomura agreed in October to acquire the Mumbai based back office and IT operations of Lehman Brothers in a deal that also included the acquisition of Lehman Brothers Services India Private Limited, Lehman Brothers Financial Services (India) Private Limited and the Lehman Brothers Structured Finance Services Private Limited. Outside of India, Nomura has also acquired the Lehman investment banking operations in Asia Pacific, Europe and the Middle East.
The Nomura IT team swelled by 1,200 employees as a result of the deal, but longer term the acquisition is likely to improve IT at Nomura.