Goh Seng Chong/Bloomberg - Takumi Shibata, chief operating officer of Nomura Holdings.
At 8 a.m. on Jan. 10, Takumi Shibata, chief operating officer of Nomura Holdings, walked into the firm’s London boardroom overlooking the Thames to try to salvage the 2008 acquisition of the European and Asian units of bankrupt Lehman Brothers.
Shibata, who had flown in from Tokyo, assembled senior executives at Nomura’s wholesale business, which includes investment banking and sales and trading.
The unit’s head, Jesse Bhattal, Shibata’s deputy and putative successor, was on videoconference from Singapore with news: He was stepping down. And before the meeting, Shibata had told Bhattal’s lieutenant, Tarun Jotwani, the former Lehman trader running global markets from London, that his position was being eliminated, people familiar with the situation said.
The departure of the top two former Lehman executives was the culmination of a clash with Nomura’s old guard over competing visions for the future of Japan’s largest brokerage firm, the people say. Bhattal argued for an aggressive approach to businesses that weren’t generating high returns. His bosses in Tokyo wanted to stay the course to build a global investment-banking franchise.
The dispute emerged as the wholesale division suffered $1.1 billion in pretax losses for the six months ended Sept. 30. While the unit recovered late last year, Nomura Holdings had a $140 million loss for the last nine months of 2011.
For the 86-year-old firm, which is making its fourth attempt to emerge on the global financial stage, things aren’t going well: Since the Lehman deal, its shares have fallen more than 70 percent, reaching a 37-year low on Nov. 24.
To steer Nomura toward profitability, Bhattal, 55, wanted big cuts in equities, investment banking and the firm’s U.S. business — as much as $1.6 billion. At the same time, he saw opportunities to buy assets being unloaded by European banks to meet tougher capital rules. Executives in Tokyo balked, saying it would be a retreat from the firm’s global ambitions and could erode capital reserves.
After Bhattal said goodbye during the January conference call, Shibata spent 10 minutes explaining that Nomura’s strategy wouldn’t change and that he would take over the wholesale business, a job he had given to Bhattal not long before.
“Nomura remains committed to being a global, Asia-based investment bank,” Shibata, 59, says he told the group. Jotwani and Bhattal declined to comment.
Taking on Wall Street, London
The firm’s future rests largely in the hands of Shibata. If he fails to rescue the deal he championed, the Lehman acquisition will go down as yet another doomed attempt to compete with the top firms of Wall Street and London.
Nomura has had big ambitions for decades. It expanded abroad in the 1980s, only to retreat to Tokyo as Japan’s economy faltered. Attempts in the mid-1990s and in the past decade foundered as well. Calling the acquisition of Lehman’s international units a “once-in-a-generation opportunity,” Nomura Group chief Kenichi Watanabe and Shibata scooped up Lehman’s European operations for just $2 and the Asian franchise for $225 million in what was supposed to be a game-changing bid to compete with Wall Street banks hobbled by the financial crisis.
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