Nomura Holdings, Japan’s largest brokerage, said today that it will shut down its U.S. based mortgage-backed securities unit amid the ongoing mortgage crisis.
Nomura expects to book a $621 million loss in the unit, and a pretax loss of $340 to $510 million for the July-September second quarter, including $128 million to reorganize its U.S. business operations.
“Nomura has faced challenges in the U.S. residential mortgage-backed securities market which have led to these disappointing results,” Nomura President and CEO Nobuyuki Koga said.
As a result, more than 400 jobs in the United States will be lost, roughly 30% of its 1300 member U.S. workforce.
The company said it has reduced much of its subprime exposure, cutting its U.S. residential mortgage-backed security exposure to about 14 billion yen from 266 billion yen, of which only 100 million yen is subprime-related.
“This should all but clear up our problems in the United States, and we believe we can build a structure that will allow us to achieve a speedy recovery from the second half,” Chief Financial Officer Masafumi Nakada told a news conference.
The company said the restructuring will result in a total charge of about 15 billion yen, but should reduce its annual expenses by 25 billion yen.
In August, Nomura Securities closed its nonconforming mortgage conduit and laid off staff in its fixed-income research department.