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Nomura CEO planning to change his firm and industry with Lehman buy

Nomura Holdings president Kenichi Watanabe gestures as he speaks to journalists at the Foreign Correspondents Club of Japan in Tokyo yesterday. PHOTO: AFP

The head of Nomura Holdings Inc, Japan’s biggest brokerage, said yesterday that while the immediate liquidity crisis may be receding, global leaders must now find ways to bolster their faltering economies.

President and CEO Kenichi Watanabe praised financial authorities from major countries who met in Washington last weekend for cooperating amid the turmoil and helping restore liquidity flows.

“But the focus is now shifting toward the real economy,” said Watanabe at the Foreign Correspondents Club of Japan. “This really depends on the financial situations of each country, and how each respective government uses its funds wisely.”

For Watanabe, getting the global economy back on track is critical to his ambitions of transforming Nomura into a world-class investment bank.

When Lehman Brothers Holdings Inc filed for bankruptcy in the middle of September, Nomura pounced. It snapped up Lehman’s operations in Asia, Europe and the Middle East for US$2 billion in what Watanabe describes as a “once-in-a-generation” opportunity.

“I felt Nomura’s clients were changing but we were not ... Therefore top management was considering how we could change the company to better serve the growing needs of our clients.”

— Kenichi Watanabe, president and CEO of Nomura Holdings

It later added three of Lehman’s subsidiaries in India.

Watanabe, who took over as chief executive in April under a mantra of change, said he seeks nothing less than a “new Nomura.”

“I felt Nomura’s clients were changing but we were not,” he said. “Therefore top management was considering how we could change the company to better serve the growing needs of our clients. And we were looking to further increase our client base.”

But since then, global stock markets have plunged. Corporate profits have sunk and consumer spending is at historic lows. The list of major economies in recession now includes Japan, Hong Kong and the 15-nation euro-zone.

Nomura itself is hurting badly just as it embarks on its overseas offensive.

The company stayed deep in the red for the third straight quarter as ongoing fallout from the global financial turmoil drained its bottom line. It posted a net loss of ¥72.9 billion (US$785.6 million) for the July-September period, widely missing analysts’ forecasts.

Watanabe declined to predict when Nomura would turn a profit but touted the long-term benefits of the Lehman purchase, which provides a “perfect” complement to its existing businesses and client base.

“Given what is happening in financial markets, our overall performance is closely linked with these markets,” he said. “With market conditions changing, we are trying to adapt as much as possible to return to the black.”

He downplayed suggestions that Nomura was having trouble retaining top Lehman talent or integrating the approximately 8,000 former Lehman employees it did keep. Unlike its Western counterparts, Nomura has no plans for company wide layoffs, he said.

Instead, Watanabe repeatedly said the new blood would only help the company evolve.

“It’s not about trying to keep the old Nomura or the Lehman culture,” he said. “We want to transform ourselves to become the new Nomura.”
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