NMR » Topics » Guarantees-

This excerpt taken from the NMR 6-K filed Sep 2, 2009.

Guarantees—

FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (“FIN 45”) specifies the disclosures to be made in regards to obligations under certain issued guarantees and requires a liability to be recognized for the fair value of a guarantee obligation.

In the normal course of business, Nomura enters into various guarantee arrangements with counterparties in the form of standby letters of credit and other guarantees, which generally have a fixed expiration date.

In addition, Nomura enters into certain derivative contracts that meet the FIN 45 definition of guarantees. FIN 45 defines guarantees to include derivative contracts that contingently require a guarantor to make payment to a guaranteed party based on changes in an underlying that relate to an asset, liability or equity security held by a guaranteed party. Since Nomura does not track whether its clients enter into these derivative contracts for speculative or hedging purposes, Nomura has disclosed below information about derivative contracts that could meet the FIN 45 definition of guarantees.

For information about the maximum potential amount of future payments that Nomura could be required to make under certain derivatives, the notional amount of contracts has been disclosed. However, the maximum potential payout for certain derivative contracts, such as written interest rate caps and written currency options, cannot be estimated, as increases in interest or foreign exchange rates in the future could be theoretically unlimited.

Nomura records all derivative contracts at fair value on its consolidated balance sheet. Nomura believes the notional amounts generally overstate its risk exposure. Since the derivative contracts are accounted for at fair value, carrying value is considered the best indication of payment/performance risk for individual contracts.

The following table sets forth information about Nomura’s derivative contracts that could meet the definition of a guarantee under FIN 45 and certain other guarantees:

 

     Millions of yen
     June 30, 2009    March 31, 2009
     Carrying
value
   Maximum
Potential
Payout/
Notional
Total
   Carrying
value
   Maximum
Potential
Payout/
Notional
Total

Derivative contracts(1)

   ¥ 2,233,645    ¥ 51,859,091    ¥ 2,091,560    ¥ 43,848,870

Standby letters of credit and other guarantees(2)

     0      8,544      1      9,270

 

(1) Credit derivatives are disclosed in Note 4, “Derivative instruments and hedging activities” and are excluded from “Derivative contracts”.
(2) Collateral held in connection with standby letters of credit and other guarantees as of June 30, 2009 is ¥6,867 million and as of March 31, 2009 is ¥6,571 million.

The following table sets forth expiration information about Nomura’s derivative contracts that could meet the definition of a guarantee under FIN 45 and certain other guarantees as of June 30, 2009:

 

     Millions of yen
          Maximum Potential Payout/Notional
               Years to Maturity
     Carrying
value
   Total    Less than
1 year
   1 to 3
years
   3 to 5
years
   More than
5 years

Derivative contracts

   ¥ 2,233,645    ¥ 51,859,091    ¥ 29,923,071    ¥ 7,590,752    ¥ 2,741,345    ¥ 11,603,923

Standby letters of credit and other guarantees

     0      8,544      8,207      103      —        234

 

93


Table of Contents
This excerpt taken from the NMR 6-K filed Feb 25, 2009.

Guarantees—

FIN 45 specifies the disclosures to be made in regards to obligations under certain issued guarantees and requires a liability to be recognized for the fair value of a guarantee obligation.

In the normal course of business, Nomura enters into various guarantee arrangements with counterparties in the form of standby letters of credit and other guarantees, which generally have a fixed expiration date.

In addition, Nomura enters into certain derivative contracts that meet the FIN 45 definition of guarantees. FIN 45 defines guarantees to include derivative contracts that contingently require a guarantor to make payment to a guaranteed party based on changes in an underlying that relate to an asset, liability or equity security of a guaranteed party. Because Nomura does not track whether its clients enter into these derivative contracts for speculative or hedging purposes, Nomura has disclosed information about derivative contracts that could meet the FIN 45 definition of guarantees. As of March 31, 2008, these derivative contracts included certain written options and credit default swaps. Nomura adopted FSP FAS 133-1 and FIN 45-4 for the three months ended December 31, 2008 and did not include credit default swaps as of December 31, 2008.

 

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Table of Contents

For information about the maximum potential amount of future payments that Nomura could be required to make under certain derivatives, the notional amount of contracts has been disclosed. However, the maximum potential payout for certain derivative contracts, such as written interest rate caps and written currency options, cannot be estimated, as increases in interest or foreign exchange rates in the future could be theoretically unlimited.

Nomura records all derivative contracts at fair value on its consolidated balance sheet. Nomura believes the notional amounts generally overstate its risk exposure. Because the derivative contracts are accounted for at fair value, carrying value is considered the best indication of payment/performance risk for individual contracts.

The following table sets forth information about Nomura’s derivative contracts that could meet the definition of a guarantee under FIN 45 and certain other guarantees:

 

     Millions of yen
     December 31, 2008    March 31, 2008
     Carrying
value(1)
   Maximum
Potential
Payout/
Notional
Total(1)
   Carrying
value
   Maximum
Potential
Payout/
Notional
Total

Derivative contracts

   ¥ 1,472,554    ¥ 18,850,995    ¥ 3,325,218    ¥ 70,659,948

Standby letters of credit and other guarantees(2)

     2      2,439      756      6,438

 

(1) Credit derivatives are disclosed in Note 4, “Credit Derivatives” and not included in above Derivative contracts as of December 31, 2008.
(2) There was no collateral held in connection with standby letters of credit and other guarantees as of December 31, 2008 and March 31, 2008.

The following table sets forth expiration information about Nomura’s derivative contracts that could meet the definition of a guarantee under FIN 45 and certain other guarantees as of December 31, 2008:

 

     Millions of yen
          Maximum Potential Payout/Notional
               Years to Maturity
     Carrying
value
   Total    Less than
1 year
   1 to 3
years
   3 to 5
years
   More than
5 years

Derivative contracts

   ¥ 1,472,554    ¥ 18,850,995    ¥ 5,574,139    ¥ 3,693,355    ¥ 1,941,136    ¥ 7,642,365

Standby letters of credit and other guarantees

     2      2,439      1,638      607      1      193
This excerpt taken from the NMR 6-K filed Dec 1, 2008.

Guarantees—

FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (“FIN 45”) specifies the disclosures to be made in regards to obligations under certain issued guarantees and requires a liability to be recognized for the fair value of a guarantee obligation.

In the normal course of business, Nomura enters into various guarantee arrangements with counterparties in the form of standby letters of credit and other guarantees, which generally have a fixed expiration date.

In addition, Nomura enters into certain derivative contracts that meet the FIN 45 definition of guarantees. FIN 45 defines guarantees to include derivative contracts that contingently require a guarantor to make payment to a guaranteed party based on changes in an underlying that relate to an asset, liability or equity security of a guaranteed party. These derivative contracts include certain written options and credit default swaps. Because Nomura does not track whether its clients enter into these derivative contracts for speculative or hedging purposes, Nomura has disclosed information about derivative contracts that could meet the FIN 45 definition of guarantees.

For information about the maximum potential amount of future payments that Nomura could be required to make under certain derivatives, the notional amount of contracts has been disclosed. However, the maximum potential payout for certain derivative contracts, such as written interest rate caps and written currency options, cannot be estimated, as increases in interest or foreign exchange rates in the future could be theoretically unlimited.

Nomura records all derivative contracts at fair value on its consolidated balance sheet. Nomura believes the notional amounts generally overstate its risk exposure.

The following table sets forth information about Nomura’s derivative contracts that could meet the definition of a guarantee under FIN 45 and certain other guarantees:

 

     Millions of yen
     September 30, 2008    March 31, 2008
     Carrying
value
   Maximum
Potential
Payout/
Notional
Total
   Carrying
value
   Maximum
Potential
Payout/
Notional
Total

Derivative contracts

   ¥ 3,609,297    ¥ 73,641,599    ¥ 3,325,218    ¥ 70,659,948

Standby letters of credit and other guarantees(1)

     499      3,795      756      6,438

 

(1) There was no collateral held in connection with standby letters of credit and other guarantees as of September 30, 2008 and March 31, 2008.

The following table sets forth expiration information about Nomura’s derivative contracts that could meet the definition of a guarantee under FIN 45 and certain other guarantees as of September 30, 2008:

 

     Millions of yen
     Carrying
value
   Maximum Potential Payout/Notional
             Years to Maturity
        Total    Less than
1 year
   1 to 3
years
   3 to 5
years
   More than
5 years

Derivative contracts

   ¥ 3,609,297    ¥ 73,641,599    ¥ 8,835,724    ¥ 16,390,204    ¥ 28,489,295    ¥ 19,926,376

Standby letters of credit and other guarantees

     499      3,795      1,884      1,904      1      6

 

66


Table of Contents
This excerpt taken from the NMR 6-K filed Sep 2, 2008.

Guarantees—

FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (“FIN 45”) specifies the disclosures to be made in regards to obligations under certain issued guarantees and requires a liability to be recognized for the fair value of a guarantee obligation.

In the normal course of business, Nomura enters into various guarantee arrangements with counterparties in the form of standby letters of credit and other guarantees, which generally have a fixed expiration date.

In addition, Nomura enters into certain derivative contracts that meet the FIN 45 definition of guarantees. FIN 45 defines guarantees to include derivative contracts that contingently require a guarantor to make payment to a guaranteed party based on changes in an underlying that relate to an asset, liability or equity security of a guaranteed party. These derivative contracts include certain written options and credit default swaps. Because Nomura does not track whether its clients enter into these derivative contracts for speculative or hedging purposes, Nomura has disclosed information about derivative contracts that could meet the FIN 45 definition of guarantees.

For information about the maximum potential amount of future payments that Nomura could be required to make under certain derivatives, the notional amount of contracts has been disclosed. However, the maximum potential payout for certain derivative contracts, such as written interest rate caps and written currency options, cannot be estimated, as increases in interest or foreign exchange rates in the future could be theoretically unlimited.

Nomura records all derivative contracts at fair value on its consolidated balance sheet. Nomura believes the notional amounts generally overstate its risk exposure.

 

83


Table of Contents

The following table sets forth information about Nomura’s derivative contracts that could meet the definition of a guarantee under FIN 45 and certain other guarantees:

 

     Millions of yen
     June 30, 2008    March 31, 2008
     Carrying
value
   Maximum
Potential
Payout/
Notional
Total
   Carrying
value
   Maximum
Potential
Payout/
Notional
Total

Derivative contracts

   ¥ 3,149,866    ¥ 78,820,388    ¥ 3,325,218    ¥ 70,659,948

Standby letters of credit and other guarantees

     715      4,257      756      6,438

The following table sets forth expiration information about Nomura’s derivative contracts that could meet the definition of a guarantee under FIN 45 and certain other guarantees as of June 30, 2008:

 

     Millions of yen
          Maximum Potential Payout/Notional
               Years to Maturity
     Carrying
value
   Total    Less than
1 year
   1 to 3
years
   3 to 5
years
   More than
5 years

Derivative contracts

   ¥ 3,149,866    ¥ 78,820,388    ¥ 10,709,077    ¥ 19,048,306    ¥ 27,841,162    ¥ 21,221,843

Standby letters of credit and other guarantees(1)

     715      4,257      1,999      2,251      1      6

 

 

(1) There was no collateral held in connection with standby letters of credit and other guarantees as of June 30, 2008.

 

84


Table of Contents
This excerpt taken from the NMR 6-K filed May 15, 2008.

Guarantees—

(Omitted)

The following table sets forth information about Nomura’s derivative contracts that could meet the definition of a guarantee and certain other guarantees:

 

     Millions of yen
     September 30    March 31
     2006    2007    2007

Derivative contracts(1)

   ¥ 35,160,996    ¥ 65,615,626    ¥ 49,618,605

Standby letters of credit and other guarantees(2)

     7,191      7,591      18,509

 

(1) Carrying value of the derivative contracts were ¥924,082 million, ¥1,522,939 million and ¥972,547 million as of September 30, 2006 and 2007, and March 31, 2007, respectively.
(2) Carrying value of the standby letters of credit and other guarantees were ¥1,503 million, ¥1,185 million and ¥1,373 million as of September 30, 2006 and 2007, and March 31, 2007, respectively.

 

36


Table of Contents
This excerpt taken from the NMR 6-K filed Dec 20, 2007.

Guarantees—

FASB Interpretation No. 45 (“FIN 45”) specifies the disclosures to be made in regards to obligations under certain issued guarantees and requires a liability to be recognized for the fair value of a guarantee obligation.

Nomura enters into, in the normal course of its subsidiaries’ banking/financing activities, various guarantee arrangements with counterparties in the form of standby letters of credit and other guarantees, which generally have a fixed expiration date.

In addition, Nomura enters into certain derivative contracts that meet the FIN 45 definition of guarantees. FIN 45 defines guarantees to include derivative contracts that contingently require a guarantor to make payment to a guaranteed party based on changes in an underlying that relate to an asset, liability or equity security of a guaranteed party. These derivative contracts include certain written options and credit default swaps. Because Nomura does not track whether its clients enter into these derivative contracts for speculative or hedging purposes, Nomura has disclosed information about derivative contracts that could meet the FIN 45 definition of guarantees.

For information about the maximum potential amount of future payments that Nomura could be required to make under certain derivatives, the notional amount of contracts has been disclosed. However, the maximum potential payout for certain derivative contracts, such as written interest rate caps and written currency options, cannot be estimated, as increases in interest or foreign exchange rates in the future could be theoretically unlimited.

Nomura records all derivative contracts at fair value on its consolidated balance sheets. Nomura believes the notional amounts generally overstate its risk exposure.

The following table sets forth information about Nomura’s derivative contracts that could meet the definition of a guarantee and certain other guarantees:

 

     Millions of yen
     September 30    March 31
     2006    2007    2007

Derivative contracts(1)

   ¥ 35,160,996    ¥ 65,615,626    ¥ 49,618,605

Standby letters of credit and other guarantees(2)

     7,191      8,114      18,509

(1) Carrying value of the derivative contracts were ¥924,082 million, ¥1,522,939 million and ¥972,547 million as of September 30, 2006 and 2007, and March 31, 2007, respectively.
(2) Carrying value of the standby letters of credit and other guarantees were ¥1,503 million, ¥1,185 million and ¥1,373 million as of September 30, 2006 and 2007, and March 31, 2007, respectively.

 

76


Table of Contents
This excerpt taken from the NMR 6-K filed Dec 20, 2006.

Guarantees—

FASB Interpretation No. 45 (“FIN 45”) specifies the disclosures to be made in regards to obligations under certain issued guarantees and requires a liability to be recognized for the fair value of a guarantee obligation.

Nomura enters into, in the normal course of its subsidiaries’ banking/financing activities, various guarantee arrangements with counterparties in the form of standby letters of credit and other guarantees, which generally have a fixed expiration date.

In addition, Nomura enters into certain derivative contracts that meet the FIN 45 definition of guarantees. FIN 45 defines guarantees to include derivative contracts that contingently require a guarantor to make payment to a guaranteed party based on changes in an underlying that relate to an asset, liability or equity security of a guaranteed party. These derivative contracts include certain written options and credit default swaps. Because Nomura does not track whether its clients enter into these derivative contracts for speculative or hedging purposes, Nomura has disclosed information about derivative contracts that could meet the FIN 45 definition of guarantees.

For information about the maximum potential amount of future payments that Nomura could be required to make under certain derivatives, the notional amount of contracts has been disclosed. However, the maximum potential payout for certain derivative contracts, such as written interest rate caps and written currency options, cannot be estimated, as increases in interest or foreign exchange rates in the future could be theoretically unlimited.

Nomura records all derivative contracts at fair value on its consolidated balance sheets. Nomura believes the notional amounts generally overstate its risk exposure.

The following table sets forth maximum potential payout/notional about Nomura’s derivative contracts that could meet the definition of a guarantee, standby letters of credit and certain other guarantees at September 30, 2005, September 30, 2006 and March 31, 2006:

 

     Millions of yen
     September 30   

March 31

     2005    2006    2006

Derivative contracts(1)

   ¥ 17,710,282    ¥ 35,160,996    ¥ 25,401,478

Standby letters of credit and other guarantees(2)

     7,152      7,191      6,993

(1) Carrying value of the derivative contracts were ¥597,516 million, ¥924,082 million and ¥782,586 million as of September 30, 2005 and 2006, and March 31, 2006, respectively.
(2) Carrying value of the standby letters of credit and other guarantees were ¥69 million, ¥1,503 million and ¥56 million as of September 30, 2005 and 2006, and March 31, 2006, respectively.

 

62


Table of Contents
This excerpt taken from the NMR 6-K filed Dec 27, 2005.

Guarantees—

 

In November 2002, the FASB issued FIN No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN No. 45 specifies the disclosures to be made about obligations under certain issued guarantees and requires a liability to be recognized for the fair value of a guarantee obligation. The recognition and measurement provisions of the interpretation apply prospectively to guarantees issued or amended after December 31, 2002.

 

Nomura enters into, in the normal course of its subsidiaries’ banking/financing activities, various guarantee arrangements with counterparties in the form of standby letters of credit and other guarantees, which generally have a fixed expiration date.

 

In addition, Nomura enters into certain derivative contracts that meet the FIN No. 45 definition of guarantees. FIN No.45 defines guarantees to include derivative contracts that contingently require a guarantor to make payment to a guaranteed party based on changes in an underlying that relates to an asset, liability or equity security of a guaranteed party. These derivative contracts include certain written options and credit default swaps. Because Nomura does not track whether its clients enter into these derivative contracts for speculative or hedging purposes, Nomura has disclosed information about derivative contracts that could meet the FIN No. 45 definition of guarantees.

 

For information about the maximum potential amount of future payments that Nomura could be required to make under certain derivatives, the notional amount of contracts has been disclosed. However, the maximum potential payout for certain derivative contracts, such as written interest rate caps and written currency options, cannot be estimated, as increases in interest or foreign exchange rates in the future could be theoretically unlimited.

 

Nomura records all derivative contracts at fair value on its consolidated balance sheets. Nomura believes the notional amounts generally overstate its risk exposure.

 

—56—


Table of Contents

The following table sets forth maximum potential payout/notional about Nomura’s derivative contracts that could meet the definition of a guarantee, standby letters of credit and certain other guarantees at September 30, 2004, September 30, 2005 and March 31, 2005:

 

     Millions of yen

     September 30

  

March 31

2005


     2004

   2005

  

Derivative contracts(1)

   ¥ 12,409,433    ¥ 17,710,282    ¥ 13,013,712

Standby letters of credit and other guarantees(2)

     7,280      7,152      7,919

(1) Carrying value of the derivative contracts were ¥363,616 million, ¥597,516 million and ¥325,711 million as of September 30, 2004 and 2005, and March 31, 2005, respectively.
(2) Carrying value of the standby letters of credit and other guarantees were ¥82 million, ¥69 million and ¥77 million as of September 30, 2004 and 2005, and March 31, 2005, respectively.

 

13. Segment information:

 

This excerpt taken from the NMR 6-K filed Jan 25, 2005.

Guarantees—

 

Nomura enters into, in the normal course of its subsidiaries’ banking/financing activities, various guarantee arrangements with counterparties in the form of standby letters of credit and other guarantees, which generally have a fixed expiration date. In addition, Nomura enters into certain derivative contracts that meet the accounting definition of a guarantee under FIN No. 45. Contractual amounts of these guarantees, other than derivative contract, for which the fair values are recorded on the consolidated balance sheets at fair value, were as follows:

 

     Millions of yen

  

Translation into
millions of

U.S. dollars


   Millions of yen

     December 31,
2004


   December 31,
2004


   March 31,
2004


Standby letters of credit and other guarantees

   ¥ 6,949    $ 68    ¥ 29,424

 

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