Moody's Investors Service has commented on Nomura Holdings Inc. (NHI)'s announcements on September 22nd and 23rd that it had reached an agreement to acquire Lehman Brothers' franchise in the Asia/Pacific region (including Japan and Australia), as well as its European and Middle Eastern equities and investment banking operations. At this time, Moody's is making no change to its A2/Prime-1 ratings for Nomura Securities Co., Ltd. or to the A3 rating for NHI, its holding company, since it is our understanding that there will be no significant, immediate pay out for these acquisitions. The outlook for the ratings remains stable.
According to the announcement, the deal includes all of Lehman Brothers' Asia/Pacific franchises, with approximately 3,000 employees, and the European and Middle Eastern equities and investment banking operations, with approximately 2,500 employees. It does not include any trading assets or trading liabilities. The amount of the transaction should also
be immaterial, and should be manageable in view of NHI's adequate capital base and liquidity.
In Moody's view, the acquisitions may benefit Nomura, further strengthening its franchise and customer base outside Japan as well as improving future revenue diversification. However, given the current difficulties in the operating environment, the outlook for revenue from the expanded franchise is uncertain. NHI may face significant challenges
in integrating the businesses and generating stable revenues and profits from these investment banking businesses. Moody's will continue to closely monitor the company's overall strategy for managing earnings volatility, as well as its ability to generate expected revenue and earnings from the transaction.
Nomura Securities Co., Ltd., headquartered in Tokyo, is the largest securities firm in Japan, with total assets of JPY12 trillion as of June 30, 2008. Nomura Holdings, Inc., also headquartered in Tokyo, is the parent holding company of Nomura Securities Co., Ltd., with total consolidated assets of JPY26 trillion as of June 30, 2008.
Tokyo
Maki Hanatate
VP - Senior Credit Officer
Financial Institutions Group
Moody's Japan K.K.
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100
Tokyo
Naoki Morimura
Analyst
Financial Institutions Group
Moody's Japan K.K.
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100