Nomura Holdings Inc.'s Takumi Shibata is ready to poach top U.S. bankers to fulfill his ambitious plan to turn Japan's top investment house into a global player.
Shibata, Nomura's chief operating officer and architect of its international expansion, picked up the Asian and European businesses of failed Wall Street firm Lehman Brothers in late 2008. Barclays grabbed Lehman's U.S. arm at the time, so Shibata's No. 1 priority now is to plot a further U.S. expansion.
Big institutional investors don't want to put all their eggs in one basket — the financial crisis showed it pays off to spread your risk. That means there's an opportunity for "new" entrants like Nomura, Shibata said in an interview at Nomura's headquarters.
"Institutions need to diversify," said Shibata, adding that around a quarter of the entire U.S. trading pie is up for grabs.
"The next several months are the weeding out," Shibata predicted.
"Tightening spreads and a tightening regulatory environment will cause head winds for the industry."
That's because the easy money in bond trading has been made. And regulators are making noise about limiting proprietary trading, or trading for one's own account, jolting firms that dominate that business.
"It's only during difficult times that market share will move," Shibata said. The U.S. market makes up half of the world's banking fees, so you've got to be there, he added.
Heading his to-do list is beefing up Nomura's U.S. stock and bond trading businesses by adding more research and venturing into new areas like convertibles. In all, Shibata sees U.S. staffing jumping by a quarter to 2,000 in the financial year to March 2011.
The U.S. expansion is meant to drive Nomura's ambitious target to derive three quarters of revenues from overseas in five years, up from 50 percent now. Shibata wants to bring international revenue up to 60 percent in the next year.
Once Nomura has established a credible trading business, deals will follow, Shibata said, adding that it will take time.
"Companies are shy to switch allegiance," Shibata said.
Shibata has dispatched Glenn Schiffman, a former Lehman media banker in Asia, to build the U.S. M&A business. Schiffman's brief is to poach several rainmakers first, Shibata said, declining to pinpoint sectors because then other firms "will put up defenses."
It's virgin territory: Nomura now has fewer than two dozen people in investment banking in the Americas.
"He's starting from scratch," one Hong Kong banker told Reuters last week.
Shibata, who used to head Nomura's asset management operations, has been consulting "his teachers" — big-time U.S. fund managers who can kick business Nomura's way — in plotting his U.S. expansion. It goes down to individual "names" he contemplates hiring.
A big U.S. expansion? Big names?
Nomura has been there before. A 1990s foray built on proprietary trading and mortgage securities ended in tears when world markets swooned in 1998 after Russia's debt default. Nomura took more than $1 billion in charges and closed down a U.S. operation that was known for its big bets — and big bonuses.
This time is different, Shibata said, adding that Nomura now has a singular focus on customer trading and is building a truly global organization with plenty of controls.
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