Nomura £491 million in red as the deals dry up

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Second-quarter net losses grew to 72.9 billion yen (£490.8 million) from 11.7 billion yen a year ago. The losses, well above consensus estimates of 56.8 billion yen, come as Nomura accelerates global expansion after buying bankrupt Lehman Brothers' operations in Asia and Europe.

Nomura's expenses are also set to increase as it folds Lehman's operations into its own. Chief executive Kenichi Watanabe has guaranteed salaries and bonuses to keep workers from joining competitors. Nomura today said it expects to spend $2 billion (£1.26 billion) to integrate 8000 Lehman employees.

It is losing 100 of the 170 employees in Lehman's Japan equity research, sales and electronic-trading unit to Barclays and Mizuho Financial.

In London, Chicago-based Citadel Investment Group hired three senior executives from Lehman's bond-trading department.

Lehman had $3.1 billion of revenue in Asia during 2007, and $6.3 billion in Europe and the Middle East. With revenues at Nomura down 39% on lower business on the Tokyo Stock Exchange, analysts are warning that the firm could be heading for a record annual loss.

It is the first time Tokyo-based Nomura has posted three consecutive quarterly losses. Revenue fell to 257.7 billion yen for the three months from 420.7 billion yen a year earlier while brokerage commissions declined 21% to 84.9 billion yen.

Nomura posted a 21 billion yen trading loss, against an 8.7 billion yen profit a year earlier.