Japan's Nomura to recruit assistance to help run South Canterbury Finance's 'Good Bank'

Japan's Nomura to recruit assistance to help run South Canterbury Finance's 'Good Bank'

By Gareth Vaughan

Japanese investment bank Nomura plans to bring some hired help on board to run the NZ$123 million worth of loans it is buying from South Canterbury Finance's receiver.

A Hong Kong based Nomura spokeswoman, Felicity Albert, told interest.co.nz that the South Canterbury Finance (SCF) deal was seen as a "useful platform" from which Nomura can lend and invest in New Zealand. The company doesn't have a new Zealand office and nor does it plan to open one.

What SCF's receivers McGrathNicol have described as the failed finance firm's "Good Bank," consisting of consumer, business and rural loans, was bought for a "confidential" price, Albert said. It's Nomura's first New Zealand acquisition.

"The loan portfolio will continue to be managed from Christchurch by South Canterbury Finance resources in combination with our service providers that we will engage as appropriate in coordination with our Sydney office," Albert said.

Further New Zealand acquisitions were possible.

"I don't think this is specific to New Zealand, but we're always looking at a range of lending-investment opportunities that make sense for our business strategy," she said.

Albert said Nomura planned to fund the SCF business through internal sources and wasn't looking to raise money from the public such as through issuing retail debentures.

Snapped up Lehman Brothers' Asia-Pacific operations in 2008 & lost money in Madoff ponzi scheme

Nomura's first foray into New Zealand comes after the group expanded its Asia-Pacific, including Australian presence, by snapping up the Asia-Pacific operations of Lehman Brothers, the highest profile casualty of the US sub-prime mortgage meltdown in 2008. That deal came just a week after the Wall Street investment bank filed for Chapter 11 bankruptcy protection in September 2008 in what Nomura's president and CEO Kenichi Watanabe described as a once in a generation opportunity.

Nomura has operated in Australia for 25 years and now has about 150 staff there with offices in Sydney and Melbourne. In Australia it's primarily involved in fixed income, equities and advisory to wholesale clients.

The Japanese investment bank also hit the news in December 2008 when it acknowledged that its exposure to Bernard Madoff's multi-billion dollar ponzi scheme ran to about 27.5 billion yen (about NZ$430 million). It described the loss as "non-material" given its capital base. Madoff is currently serving a 150 year prison sentence.

SCF's former owner, Allan Hubbard, is facing 50 charges from the Serious Fraud Office (SFO), which is also investigating a handful of SCF related party loans.

Albert said Nomura viewed the SCF loans it was buying as a good investment and it had done "all the due diligence."

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Maybe Allan Hubbard should offer his services...!