Posted on 10/15/2007 6:53:24 AM PDT by TigerLikesRooster
Nomura to Shutter U.S. Mortgage Business
Monday October 15, 8:10 am ET
By Hiroko Tabuchi, Associated Press Writer
Japan's Nomura to Shut Down U.S. Mortgage-Backed Securities Business
TOKYO (AP) -- Nomura Holdings, Japan's largest securities firm by revenue, said Monday it will shut down its U.S. residential mortgage-backed securities business, the latest casualty of the subprime mortgage crisis. Nomura said in a statement Monday it will book a 73 billion yen ($621 million) loss in its residential mortgage-backed securities business.
The group now expects a group pretax loss of 40-60 billion yen ($340-510 million) for the July-September quarter, including about 15 billion yen ($128 million) to reorganize its U.S. business, according to the statement.
The company also said it will cut more than 400 jobs in the U.S. -- about 30 percent of its work force there -- by March 2008, mostly in its broker-dealer operations and back offices.
"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 in the statement.
The Japanese group has already written off about $620 million related to its U.S. subprime mortgage-related business.
Nomura's woes follow a string of losses at major U.S. and European banks from exposure to risky loans made to individuals with poor credit histories.
Mortgage-backed securities are created by bundling together these home loans and repackaging them as securities that can be bought and sold.
Citigroup Inc., Merrill Lynch and UBS AG have all warned that loan-related losses will significantly hurt their third-quarter results. Citigroup has booked $5.9 billion in losses, while Merrill Lynch has booked $5 billion.
Standard & Poor's said its rating on the Nomura group would not be affected by the loss, citing its generally solid performance in other segments like domestic operations.
Nomura Holdings Inc. shares fell 0.5 percent to 2,080 yen in Tokyo. The announcement was made after the close of trading.
Ping!
So who is the winner here? If Nomura lost money, someone else might have made some?
Any time you hear a corporate suit talking about "challenges", he's really talking about a bloodbath.
Who is going to be able to get a mortage approved 6 months from now? This seems real bad.
Good question as the subprime "crisis" is pure smoke'n'mirrors. Besides, the Japanese really don't make major mistakes...
Mortgage/Credit/Housing Issues Ping List
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I walked into a Wells Fargo office last week and got approved all the way to closing for a 30 year fixed in about 15 minutes. If you have a good credit score and enough income to buy the house you want, it's not a problem at all. Is this not the way it should be?
Interesting article. On one hand, it appears that there’s very little effect on their stock price, suggesting either this was not a surprise to Tokyo, or that in fact it’s a small part of Nomura’s overall portfolio.
OTOH it’s another in a long string. The “losses” appear to be more related to the unsaleability of the loans rather than actual defaults...but it’s hard to tell.
Besides, the Japanese really don’t make major mistakes...
Pearl Harbor wasn’t a great move on their part.
What goes unsaid here is that in the Clinton years, and Donna Shalala's bidding, the mortgage lenders were ordered to make these risky loans or face Federal discrimination charges. This is simply another example of what the country faces when Hillary! takes over.
Nobody better at losing money in America than the Japanese.
On another note, have you looked at R/E listings in Detroit?? Good golly, you can buy a mansion there for 150k. I’m actually contemplating some sort of r/e investment plan for the area. Buy now, sit on/rent out, then cash in say 5-10 yrs later? NY was just as bad as Detroit not too many years ago, folks made a killing there.
“Buy now, sit on/rent out, then cash in say 5-10 yrs later? NY was
just as bad as Detroit not too many years ago, folks made a killing there.”
As a speculative move, it could be tempting.
BUT do first consider (RE: Detroit area):
1. Lost money from being stiffed by renters
2. Lost money from the months it usually takes to evict problem/non-paying rentors
3. Lost money as Gov. Granholm (and G-d-Only-Knows even someone worse
after her) decides that Michigan landlords are the next “deep-pockets”
to keep Michigan on economic life-support.
4. Lost money when some “neighbor” in Detroit decides to torch a
building (maybe yours) on Halloween or when some Detroit-area professional
sports teams wins the league championship.
Or loses the league championship series.
Many motivated, talented people left Michigan/Detroit during the
late 1970s-early 1980s “oil boom” to find a life below the Mason-Dixon line.
I suspect that more will do the same even just to get to the Sun Belt
as Michigan/Detroit tries to squeeze more and more from fewer and fewer
productive, tax-paying slaves.
#3 was a concern I really think is the “next step”. #4 is one that I’d need more feedback on, from locals, or a visit with my own two eyes.
If Detroit is so bad, that just walking along the street is likely to get you killed, then you’re right, it literally has no value at all. Yes, I’d heard about the lunacy during Halloween...
Frankly, I’m going to bet that Detroit takes one more down move. Your #3 happens, and the housing economy and speculators are eaten alive for another couple years at least.
In order for things to turn around, obviously, you need a Giuliani type to be elected Mayor, along with a conservative Governor. NYC could do it, Detroit just might do it as well.
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