Japan’s Nomura Securities is weighing up the impact of a scandal in Tokyo involving some of its senior executives. Bankers say the company may find it harder to win corporate finance mandates in the Middle East and elsewhere as a result of the problems in Japan.
On 5 June, Tokyo prosecutors charged Nomura and two former executives with illegally compensating a Japanese gangster for $430,000 in trading losses. The investigation is still going on and a Nomura spokesman in Tokyo told MEED that it was too early to say what the effect of the scandal would be on the company’s business worldwide. ‘It’s not measurable so far. It heavily depends on how deep the disciplinary action taken by the Japanese finance ministry is.’
The scandal has already had an effect in the Middle East. On 5 June, the Israeli Finance Ministry announced that it was taking away a mandate from Nomura to manage a Y20,000 million ($173 million) bond issue and giving it to another Japanese firm, Daiwa Securities. However, Nomura is actively pursuing other deals in the region and is said to be close to winning the mandate for a large equity offering in Abu Dhabi (see UAE).
Nomura International, a London-based subsidiary of the Japanese firm, is lead-managing a global share issue for Egypt’s Misr International Bank (MIBank) alongside two other banks. The issue is not affected by events in Tokyo, but bankers at competing institutions say Nomura’s image worldwide may suffer because of the trouble in Japan. ‘They’re going to have a tough time to win mandates worldwide in the next year,’ says a US investment banker. ‘Competition is cut-throat and competitors will be using this to gain market share.’
The scandal comes at a time when large numbers of foreign banks are showing interest in Arab bonds and equities and Arab issuers are becoming more sophisticated in dealing with them. Bankers say that Egypt, for example, has an unstated policy of spreading mandates around a large number of banks, rather than relying on one or two. Bankers also note that in the past, most bonds by Lebanese issuers were lead-managed by Merrill Lynch or Banque Paribas, but the government picked Societe Generale and Commerzbank for its recent deutschmark bond.