Nomura, perhaps more than any other global bank, has a habit of entering new markets with aggression, hiring in droves where it see opportunities. That’s happening right now in the U.S., where the Japanese bank is poaching high-priced talent from bigger U.S. players in sectors like investment banking and fixed income, despite its pledge to cut $1 billion off the books.
What’s giving some pause, however, is that Nomura also has a habit of exiting markets with the same velocity as it enters them. It’s currently doing just that in Europe and various parts of Asia. Recruiters remain rather skeptical of Nomura’s loud resurgence into the U.S. market, particularly in areas like investment banking and fixed income, risky business units that some other banks have essentially ignored.
“After earlier deemphasizing its overseas operations, its aggressive reentrance is a bit puzzling,” said Richard Lipstein, managing director at Gilbert Tweed Associates. “The mixed message their delivering will make it a problem expanding the way they want to.”
Nomura tells us it’s not a resurgence, but rather a natural progression from product development to sales. Atsushi Yoshikawa, Nomura’s president and the head of its investment bank, told investors last month that he’s happy with the firm’s product line, and that now is the time to distribute those products to clients. Nomura made two fixed income sales hires the day of his speech.
So how is Nomura poaching talent from the likes of UBS, Barclays and Morgan Stanley? The likely answer is money. Nomura is known for paying large packages to recruit outside of Asia, something Atsushi Yoshikawa, Nomura’s president and the head of its investment bank, admitted to the Wall Street Journal this week.
Nomura has historically paid bankers more than rivals because it “didn’t have the luxury of attracting talented people at a cheap price,” he said.
In London, for example, managing directors (MDs) at Nomura earn an average of 26% more than MDs at JPMorgan, 70% more than MDs at Deutsche Bank and 135% more than MDs at HSBC.
Nomura’s U.S. office told eFinancialCareers that the bank was required to pay above market value several years ago when it was less known, but now, with better brand recognition with clients and rival firms, Nomura no longer needs overpay to recruit top talent.
No matter what the compensation strategy, Nomura is adding U.S. talent aggressively. The bank has announced roughly a dozen big name hires in fixed income and investment banking in the last month.
“Their home country market is being flooded with liquidity courtesy of the new central bank strategy and naturally the banks like Nomura are feeling flush from this boost and are going about spending it as fast as the central bank is printing it,” said Adam Zoia, CEO of Glocap, a Wall Street search firm.
But will it last? Not everyone is so sure. “The real story here is not the level of the offers but that once again Nomura is trying to expand and is throwing money around,” said Zoia. “They've done this a couple of times before and have not managed yet to break into the big leagues.”
Nomura is not ignorant of its history or its reputation. “We have to be careful not to go in and then go out again because, unfortunately, we have a reputation for not being that consistent,” Yoshikawa told the Journal.
So, will Nomura stick around for the long haul this time? Zoia, for one, remains highly skeptical.
In fairness to the bank, what are its other options? While it may be an uphill battle competing with more solidified U.S. players, the opportunities in the Americas for investment banking wins dwarf those overseas.
Nomura has already gotten a taste of what the U.S. has to offer. In the quarter ending in April, Nomura’s America’s division accounted for 26% of the firm’s wholesale net revenues. The Americas division has made major strides in currency and FX research, RMBS strategy, tech analysis, and fixed income and equities research, ranking in the top five in several categories, according to Institutional Investor.
The bank will begin relocating to its new midtown office within the next few weeks. By the end of July, the entire staff will have moved out of the downtown office. With its headcount currently at 2,271, Nomura now has the capacity to fill 3,000 seats at its new office. The firm tells us it has the option to continue growing in the U.S., although likely not at the same speed as in recent months.
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