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Nomura CEO targets US in push that could include acquisitions
[TOKYO] Nomura Holdings Inc is getting serious about shedding its perennial underdog status in the US.
Almost a decade after Barclays Plc beat Nomura to acquire Lehman Brothers Holdings Inc's North American business, the Japanese investment bank remains "weak" there, Chief Executive Officer Koji Nagai said in an interview in Tokyo. To change that, Mr Nagai said he's open to hiring entire teams of investment bankers or even making acquisitions. The company has about 200 people in its regional unit covering mergers advisory, equity capital markets and leveraged financing.
At the same time, Mr Nagai put Nomura's workers in Europe on notice: Fee income per employee there is well below the Americas and the CEO may cut jobs in unprofitable businesses in the region. Nomura has already eliminated about 900 positions, mainly in Europe and the Americas, as Mr Nagai sought to put overseas operations on a firmer financial footing.
"We will make a judgment considering market environment and profitability to decide if we should reduce headcount in Europe and simply add in the US, or if we keep Europe as it is and make a big increase in the US," said Mr Nagai, 58. "The least we can say is that the balance between EMEA and the US is bad," he added, using the acronym for Europe, the Middle East and Africa.
Mr Nagai, who acknowledged that the hiring market in the US is "competitive," faces a daunting task to make Nomura a premier investment bank there. The firm ranked outside the top 20 advisers on M&A and equity capital markets in the US this year, and is No 17 in underwriting dollar bonds, data compiled by Bloomberg show.
Nomura had 2,348 employees in the Americas and 3,047 in the EMEA region as of September, according to its latest filings. While the firm doesn't publish its overall number of investment bankers, about a fifth of them are in Europe and 12 per cent in the Americas, according to the firm. The overall US fee pool, at US$45 billion in the 12 months through March, was more than double that of Europe, according to the brokerage.
The US expansion could see the percentage of investment bankers based there double, Mr Nagai said.
Nomura has for years tried to bolster its business in the US, but has struggled to take market share from bigger firms like Goldman Sachs Group Inc, Morgan Stanley and JPMorgan Chase & Co. A key part of its strategy has been to service the Japanese companies that have pursued acquisitions there to compensate for sluggish growth at home. The Tokyo-based firm ranks 11th in advising on Japanese acquisitions in the US over the past five years, behind Mizuho Financial Group Inc, Bloomberg-compiled data show.
The firm has made senior hires in the US recently as it moves to bolster the business. Jim Voorheis joined from UBS Group AG as a managing director in the financial institutions group, and Nomura also hired veteran Credit Suisse Group AG banker Thomas Chung for its ECM business.
A major acquisition of a securities firm would be Nomura's first since it purchased Lehman's European and Asian operations following the US investment bank's collapse during the financial crisis. That deal helped bolster Nomura's presence outside Japan, but it also brought friction with Lehman bankers who chafed at the firm's stodgy culture.