Japan's Nomura left out of $12bn share sale after censure

(MENAFN- Gulf Times) Nomura Holdings Inc has suffered another setback after losing a key role in a $12bn share sale following its censure for mishandling stock-market information.
Japan's biggest brokerage was omitted from the list of securities firms chosen by the government to manage its latest sale of Japan Post Holdings Co shares, a Ministry of Finance statement showed yesterday. Nomura was a lead underwriter of the postal group's three-pronged initial public offering in 2015, along with an additional sale.
The latest deal is set to be the country's second-biggest equity offering this century. Missing out will hurt Nomura, which is reeling from its first annual loss in a decade, across businesses ranging from investment banking to retail broking.
'This will deal a blow to Nomura's reputation as an underwriter, said Shinichi Tamura, a Tokyo-based strategist at Matsui Securities Co in Tokyo. 'It could mean a loss of future business opportunities for Nomura, whose strength lies in its ability to sell shares to retail investors. Nomura has also been dropped from several bond sales following the revelations that its employees leaked non-public information on stock exchange reforms.
The company received a business improvement order by the Financial Services Agency earlier this week, its first since a 2012 insider-trading scandal.
The Finance Ministry chose Daiwa Securities Group Inc, Mizuho Securities Co and SMBC Nikko Securities Inc to manage the domestic portion of the Japan Post offering.
Goldman Sachs Group Inc, Bank of America Corp and JPMorgan Chase & Co will handle the overseas part. Yoshitaka Otsu, a spokesman at Nomura, declined to comment on the firm's omission.
A Finance Ministry official said it took into account the FSA's action when assessing Nomura's application. Speaking at a news briefing in Tokyo, the official kept open the possibility for the bank to play a more minor role if a syndicate is formed.
The ministry plans to sell 1.06bn shares of Japan Post, which would raise ¥1.27tn ($12bn) at yesterday's closing price. The sale is part of a privatisation of the postal group, which also includes a bank and insurer.
Shares of Nomura earlier tumbled 3.2% to close at the lowest level since December 2012. The firm's valuation is now 0.43 times assets, near an all-time low set during the European debt crisis in 2011.
An internal investigation by Nomura revealed last week that a researcher at an affiliate leaked information on the threshold for companies to be listed on the Tokyo Stock Exchange's first section with a strategist at the brokerage. The information was then shared within the firm and with institutional investors.
The FSA said Nomura's systems for managing information were inadequate and employees lacked awareness of compliance. The firm must submit an improvement plan and ensure that prevention measures are firmly implemented.
'This must be painful for Nomura, Kengo Sakaguchi, an analyst at Japan Credit Rating Agency, said of the Japan Post snub. 'If this situation continues, adding to the impact on Nomura's underlying sales strength and infrastructure, the company's creditworthiness may come under stronger downward pressure.

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