Structured products outside deal: Nomura

LEHMAN ACQUISITION

Nomura Holdings has said its acquisition of Lehman Brothers’ Asia operations does not include structured products transactions done by the Wall Street firm in India, estimated to be close to Rs 3,300 crore,

It also said the Rs 290-crore transaction between the Wall Street firm and Brics Securities in India is outside the ambit of the deal. “What is included in the agreement is Lehman’s employees in Asia Pacific, but not any trading assets or liabilities. Therefore, if you mean people of the business that is within the Asia Pacific operation, yes. If you mean any products, no,” a Nomura spokesperson in Hong Kong told Business Standard in an e-mail response.

The Reserve Bank of India and the Fixed Income Money Markets & Derivatives Association of India (Fimmda) are in talks with local banks to ensure that the restructuring of Lehman’s structured financial products takes place in a systematic manner without destabilising the market.

The Nomura deal has, however, come as a relief for over 40 former Brics employees who joined Lehman last September after it acquired the Indian securities firms's institutional equity business. While the transaction was worth Rs 290 crore, the last tranche of around Rs 120 crore, which can be paid by December 2009, is pending.

These employees have now been offered the option of joining Nomura’s operations in India. The new contracts will be sent to them over the next few days, sources said.

For Brics, however, it is a period of uncertainty as it is unclear how much of the outstanding amount it can recover. Sources close to the discussions said that the Lehman team in the US has been of little help so far. It is drawing comfort from the RBI’s decision to curb any outward fund remittance from Lehman outfits in India.

Brics has also informed Sebi since any brokerage-related fund infusion or withdrawal must be run past the market regulator. Nomura refused to disclose the size of the deal, but said Lehman’s BPO unit in Powai was also outside the scope of the transaction.