TOKYO/HONG KONG (Reuters) - Nomura Holdings will have to sharpen its focus on risk management systems and may need to rein in its U.S. ambitions, analysts said after the Japanese bank flagged a possible $2 billion loss tied to a single U.S. client. Nomura and other investment banks may lose more than $6 billion after lending to Archegos Capital, a U.S. investment firm run by former Tiger Asia manager Bill Hwang that was forced to liquidate large equity bets last week in a sell-off that rocked Wall Street. It raises tough questions for Nomura, Japan’s biggest brokerage and investment bank, which has been on a drive to expand beyond its domestic market, mainly with a push in the United States, and as it seeks to join the top league of global investment banks. “The key question that comes up is what were the compliance and risk folks doing all this while?” said one person with knowledge of a debate now going on inside Nomura. “There were definitely plans to do more (in the United States) and those plans will now be put on the hold until they sort out this mess. The exact extent of the losses is not clear yet,” said the person, who was not authorised to speak to the media and asked not to be named. Some brokerages have cut their ratings on Nomura, whose shares have fallen 17% in two sessions. Nomura is not alone. Credit Suisse warned of losses linked to a U.S. client, which like Nomura it did not name, although sources said it was Archegos. The brokerage arm of Japan’s Mitsubishi UFJ Financial Group on Tuesday flagged potential losses of about $300 million, also related to an unnamed U.S. client. Yet it deals a particular blow to Nomura and Chief Executive Kentaro Okuda, who has been running the bank for about a year. He has been driving the Japanese firm’s global expansion after stop-start efforts in the past decade. “Nomura has been repeating this cycle – expanding the overseas business and restructuring it after a financial hit. This is exactly the same pattern again,” said Fumio Matsumoto, chief strategist at Okasan Securities. “To become a top global bank, Nomura would have to take risk with emerging clients and increase its share, in the hope of eventually getting conventional clients. It’s extremely hard, but Nomura has no choice,” Matsumoto said. Nomura declined to comment. Till now, under Okuda, international operations have grown strongly. Overseas business, including the Americas, Europe, the Middle East, Africa and Asia excluding Japan, tripled its profit in the nine months to December to 167.2 billion yen ($1.52 billion). Nomura’s U.S. income in the same period surged to 126.8 billion yen, after its reported just 7.4 billion yen in profit in the year to March 2020 and a 114.1 billion loss in the year to March 2019, according to its latest financial filings. “I still feel that our international business is seen as unstable, affected by market conditions,” Okuda, who previously headed U.S. operations, told an investor event in December. But he added: “We are transforming into an organization capable of delivering consistent revenues despite market turbulence.” Turbulence looks set to continue for now. “If it proves that there has been a big loss on transactions with only one client, there will be questions asked about the company’s risk management system,” JPMorgan wrote, as it lowered its rating on Nomura stock to “underweight” from “neutral”. Morningstar Equity Research said Nomura could decide to take fewer risks in some areas where it had been more aggressive, such as U.S.-listed equity options. “We think the unexpected loss may end the relative honeymoon new CEO Kentaro Okuda has enjoyed since assuming the top post last April,” it said. ($1 = 110.3600 yen)