Japan's Nomura slashes eurozone debt

In this photo illustration a man removes Euro currency bills from a wallet on June 21, 2011 in Berlin, Germany.

Story highlights

  • Nomura has reduced its exposure to eurozone periphery by 75% in the past two months
  • Move shows concern about the growing risk of holding eurozone periphery government debt

Nomura has reduced its exposure to countries in the eurozone periphery by 75 per cent in the past two months in a move that highlights concerns about the growing risk of holding eurozone periphery government debt amid the region's crisis.

The Japanese investment bank said it had cut its country exposure to Greece, Ireland, Italy, Portugal and Spain from $3.55bn at the end of September, to $884m by last Thursday.

Nomura said it had slashed its exposure to Italy, in particular, by 83 per cent from $2.8bn to $467m.

"We have significantly reduced our GIIPS exposure as part an effort to proactively manage our risk profile during this period of market instability," the bank said on Monday.

The move comes as Nomura has faced growing concerns about its ability to generate profits after it posted an unexpectedly large Y46.1bn loss in the second quarter.

The bank has been placed on review by Moody's, which warns that its rating could be lowered to just one notch above junk.

What are euro 'stability' bonds?
What are euro 'stability' bonds?


    What are euro 'stability' bonds?


What are euro 'stability' bonds? 01:43

The bank has unveiled a $1.2bn cost-cutting exercise in an attempt to lower its break-even point and is seeking buyers for non-core business assets.

Last week the Financial Times reported the bank was considering the sale of Nomura Real Estate, its property arm, and Nomura Research Institute, its consulting, information technology and research arm.

So far the assets that have been put on the block and sold in recent months have been less core to the firm such as Nomura's stake in Skylark, a local restaurant chain which Bain Capital bought for about $2.1bn, and a ball-bearing business Tsubaki Nakashima sold to Carlyle for about $804m.

Nomura is not the only Japanese institution that has slashed its exposure to eurozone periphery countries on concerns about the outlook for the region, as Italian bond yields exceeded 7 per cent.

Separately, Kokusai Asset Management, which manages Japan's largest investment trust, the Global Sovereign fund, said it had sold all its Italian, Spanish and Belgian sovereign bonds.

Kokusai said it had sold all its holdings of Italian sovereign debt before yields rose above 7 per cent.

Kokusai's move follows its exit from French government bonds last month. It disposed of its Greek sovereign debts in 2009.