People
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Nomura's neighbours from 'L'
Former Lehman execs blame culture clash for limited progress
When several former LEHMAN BROTHERS
bankers were promoted to senior
managing director, not long after NOMURA
had bought the US bank’s Asian and
European operations, they were asked to
pay homage at the grave of the Japanese
broker’s founder, Tokushichi Nomura II.
For most of the ex-Lehman executives,
it was an opportunity to spend a few
pleasant days in Kyoto, rubbing shoulders
with their new paymasters. Still, it would
be hard to imagine former Lehman leader
Dick Fuld asking them to make a similar
pilgrimage to Montgomery, Alabama, the
home of the original Lehman brothers.
When Nomura outbid rivals including
Barclays and Standard Chartered to buy
the Asian and European operations of
Lehman Brothers, then chief executive
Kenichi Watanabe trumpeted it as a “once
in a generation opportunity” to transform
the Japanese broker into a global
investment bank.
10 years on from the acquisition,
agreed in two stages on September 22
and 23 2008, Watanabe is long gone. He
stepped aside after an insider trading
scandal in 2012, while most of the
former Lehman staff, who were paid so
handsomely in the form of guaranteed
bonuses in the hope they would stick
around to help with the transformation,
have also left.
While Nomura is adamant that its global
ambitions remain intact, former Lehman-
turned-Nomura bankers, along with
industry commentators, take a differentVIEWû4HEûDIFlCULTIESûASSIMILATINGûFORMERû
bulge-bracket bankers into a more rigid,
Japanese corporate culture proved too
tough, some argue.
“A key success factor in acquiring any
large advisory business is the ability to
retain talent,” said Ben Quinlan, CEO and
MANAGINGûPARTNERûOFûCONSULTANCYûlRMû
Quinlan & Associates.
h)FûYOUREûACQUIRINGûAûBULGE
BRACKETûlRMû
and fail to create a proposition where the
senior management have the ability to
operate with the same kind of autonomy
as they did previously, you’re going to run
into problems.”CULTURE WARS
Most former Lehman staff argue that
the culture clash became a barrier to thecombined entity’s success.
“The cultural differences between
Nomura and Lehman were absolutely
without doubt the number one
impediment to the thing being a success,”
said one former Lehman banker.
“The frustrations were really around a
lack of transparency on decision-making.
We would use the term ‘grin fucking’,
meaning that senior management would
just smile at you and wouldn’t raise an
objection to your face, but then it would
get killed.”
Most former Lehman executives
attribute this in part to Nomura’s decision
to stick with an executive board comprised
entirely of Nomura stalwarts and to insert
a number of legacy staff as co-heads in
the international business alongside the
former Lehman staff.
Nomura made a belated attempt to
address these issues in 2010 when former
Lehman heavyweight Jesse Bhattal was
appointed to the executive board – the
lRSTûFOREIGNERûTOûHOLDûSUCHûAûPOSITIONûnû
and made head of wholesale banking.
His appointment was interpreted at
the time as an olive branch to ex-Lehman
people, an effort to persuade them to
stick around when their two-year pay
guarantees expired. Bhattal eventually
resigned in 2012, followed by a coterie
of other senior bankers such as Tarun
Jotwani, Patrick Schmitz-Morkramer,
Philip Lynch and Georges Assi.
“I think Jesse’s appointment was
probably the last throw of the dice fromTOP STORY STRATEGYWho’s moving where...
GOLDMAN SACHS
is relocating Craig
Murray to Hong Kong
to become head of its
financial institutions
group for Asia Pacific
ex-Japan.
Murray will relocate
from Sydney
sometime this year,
while continuing
as head of FIG for
Australia and New
Zealand.He replaces John
Mahoney, who is
moving back to the
US after a four-year
stint as head of FIG
for AEJ. Mahoney has
been appointed co-
chairman, alongside
Mike Esposito, of
global FIG, a position
he is expected to take
up on October 1.
Both Murray and
Mahoney areGoldman veterans
with Murray having
joined the US bulge
bracket bank in 2000
before being named
managing director in
2010 and Mahoney
having joined
Goldman in 1987,
becoming MD in 1997
and partner in 2000.DEUTSCHE BANK’s
global markets head
for Australia Kevin
Kosovich has left after
more than 20 years
with the German
lender.
Kosovich does not
have a new role lined
up and is taking
a break from the
banking industry.
Deutsche has not
named a replacement.OVERSEAS PROFIT/LOSS (¥ BILLION)Source: Nomura annual report020406080100-0.201888.2017-79.
2016-16.2015-24.2014-79.
2013
Profit/loss (¥ billion)