Europe Financial Crisis Is at ‘Beginning of the End,’ Nomura Holdings Says
The worst of the European sovereign debt crisis may be over as the region’s banks are increasingly able to access funding, according to Nomura Holdings Inc.’s (8604) top executive in the region.
“There is evidence Europe is starting to turn a bit of a corner,” John Phizackerley, Nomura’s chief executive officer for Europe, Middle East and Africa, said in an interview on the sidelines of the World Economic Forum’s annual meeting in Davos, Switzerland today. “If we can free up European markets and access non-government money, it’s the beginning of the end.”
The European Central Bank is flooding the banking system with cheap money to avoid a credit crunch after the market for unsecured bank debt seized up in the second half of last year and cash from U.S. money market funds dried up. The ECB in December lent banks an unprecedented 489 billion euros ($642 billion) for three years.
Since the ECB’s first offering of three-year money last month, banks including Rabobank Nederland and Nordea Bank AB have sold more than 19.5 billion euros of benchmark senior unsecured debt. That compares with 14.5 billion euros of bonds from July to December last year.
ECB ‘Effective’
“The ECB is proving effective,” said Phizackerley, 49. “It doesn’t mean we don’t have another five to 10 years of hard work to do at the sovereign level, but at least foreign investment will return if there is a degree of confidence markets can clear.”
The Japanese broker bought Lehman Brothers Holdings Inc.’s European and Asian operations in a bid to expand outside its domestic market. The Tokyo-based firm has struggled to reap a return from the expansion: Nomura’s overseas units posted their biggest loss in six quarters for the three months ended September. The firm is eliminating jobs to help reduce costs by $1.2 billion.
“We are intending to stay the course,” Phizackerley said. “We will be a beneficiary of the consolidation that is coming in Europe.”
To contact the reporters on this story: Jacqueline Simmons in Davos, Switzerland at jackiem@bloomberg.net; Ambereen Choudhury in London at achoudhury@bloomberg.net;
To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net
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