BNP Paribas Among Lenders Facing $175 Million Loss on Invexstar

  • Group of banks made loans to failed firm with one employee
  • Invexstar Capital collapsed into administration last year

BNP Paribas SA, Nomura Holdings Inc. and Morgan Stanley are among some of the world’s biggest banks facing a combined 120 million-pound ($175 million) loss on dealings with a failed bond-trading brokerage with just one employee.

Invexstar Capital Management Ltd., based in London, triggered the losses when it collapsed last year after about 18 months in business, according to a Oct. 1 document filed by officials overseeing its wind-down. The firm, which had assets of about 1.2 million pounds, owes at least 49 million pounds to Paris-based BNP Paribas, 28 million pounds to Tokyo-based Nomura, 10.9 million pounds to Morgan Stanley and additional money to ING Groep NV and Mizuho Financial Group Inc. according to a filing in July. The Times reported the accounts earlier.

The extent of the banks’ losses are unusual given the size and obscurity of Invexstar, which didn’t exist until November 2013 and was run by the company’s sole employee, Alberto Statti, 49, an Italian based in London, and two consultants, filings show. The brokerage bought newly-issued bonds and sought to sell them on before having to pay for them, a model that led to losses after “a sequence of trades in short order,” according to the filings.

“It’s a hell of a lot of money to lose by anyone’s standards, particularly for a client that you’d hardly describe as a household name,” said David Buik, a market strategist at Panmure Gordon & Co. in London, who said he hadn’t heard of Invexstar until this morning. “It looks like excessive risk has been taken for a company that’s relatively new and modest.”

Officials for BNP Paribas, Nomura, ING and Morgan Stanley declined to comment. A spokeswoman for Mizuho said “the exposure arose from trading and is small in the context of Mizuho International Plc’s wider business,” in an e-mailed statement. 

Invexstar Capital received authorization from the Financial Conduct Authority in 2014, according to the regulator’s website. Diana Yeboah, a FCA spokeswoman, declined to comment. 

Statti wasn’t immediately able to be reached through a telephone call and e-mails to Invexstar. Michael Ginty, who helps oversee the liquidation of Invexstar at London-based SFP Group, declined to comment or provide contact details for Statti. Bloomberg LP, the parent company of Bloomberg News is also owed money, according to the July filing.

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