Biggest Japan bank joining Nomura to warn of US client loss

Bloomberg

Mitsubishi UFJ Financial Group Inc. joined a growing list of global financial firms as it warned of a potential loss tied to a US client.
MUFG’s securities arm is evaluating the extent of the loss and currently estimates it at about $300 million, it said in a statement on Tuesday, without naming the client.
Japan’s biggest bank said an event occurred at its MUFG Securities EMEA Plc unit on March 26, the day when massive unwinding of leveraged bets by Bill Hwang’s Archegos Capital Management roiled US markets. Credit Suisse Group AG and Nomura Holdings Inc. have warned of “significant” losses in the wake of the matter.
The amount of any loss may change depending on market prices and unwinding of the transactions, but it won’t have a material impact on the firm’s business capability or financial soundness, Mitsubishi UFJ Securities Holdings Co. said. It’s taking “all necessary steps to manage the risk.”
Lenders to Hwang’s New York-based family office are racing to contain the fallout after Archegos failed to meet margin calls last week. The forced liquidation of more than $20 billion of positions linked to the firm roiled stocks from Baidu Inc. to ViacomCBS Inc., casting a spotlight on the opaque world of leveraged trading strategies.
Nomura, Japan’s biggest brokerage, said that it had an estimated $2 billion claim against a US client, which Bloomberg identified as Archegos.
Shares of Nomura fall again on Tuesday, a day after dropping a record 16%. MUFG closed 0.5% lower, before the announcement.