Nomura Holdings, the Japanese financial services giant, and Credit Suisse, a Swiss-based bank, announced today that the companies have suffered heavy losses from a US-based hedge fund. In separate announcements, Nomura and Credit Suisse mentioned that the recent incident could have a major impact on the upcoming financial results.
According to an official announcement by Nomura Holdings, the incident occurred on 26 March 2021. The company added that the estimated amount against the client is approximately $2 billion. The shares of Nomura Holdings dropped 16% following the announcement.
“Nomura is currently evaluating the extent of the possible loss and the impact it could have on its consolidated financial results. The estimated amount of the claim against the client is approximately $2 billion based on market prices as of March 26. This estimate is subject to change depending on the unwinding of the transactions and fluctuations in market prices. Nomura will continue to take the appropriate steps to address this issue and make a further disclosure once the impact of the potential loss has been determined,” the company mentioned in the official announcement.
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In the official statement, Credit Suisse highlighted the significant losses after the bank started exiting positions with a large US-based hedge fund that defaulted on margin calls last week. Credit Suisse did not mention the name of the hedge fund, but it said that several other affected banks have started exiting their positions with the hedge fund. Shares of Credit Suisse dropped by more than 10% today after the announcement from the bank.
“While at this time it is premature to quantify the exact size of the loss resulting from this exit, it could be highly significant and material to our first-quarter results,” the Zurich-based lender said.
Credit Suisse reported a sharp net revenue decline in Q4 of 2020. Furthermore, the bank reported a net loss of CHF 353 million in the last quarter of 2020.