Nomura’s ambition to become a successful global investment bank took another blow on Tuesday after Jesse Bhattal, head of wholesale banking, resigned after less than two years in the job.
Mr Bhattal became the first non-Japanese to sit on Nomura’s 14-member executive management board when he was made chief executive of the wholesale division in March 2010. His appointment marked the company’s determination to build a global franchise, but the wholesale unit has consistently struggled to generate sufficient revenues to cover its costs.
At the end of the last fiscal year to April, Nomura assured investors that it was addressing the problems. But second-quarter figures announced in November – the first quarterly loss since March 2009 – showed that the situation had deteriorated, forcing the bank to add another $800m to a $400m cost-cutting exercise announced in July.
Nomura is due to report third-quarter earnings on February 1. Natsumu Tsujino, analyst at JPMorgan, expects another operating loss, excluding one-off items.
“The wholesale business has been the key drag on Nomura’s profitability, and the major reason they’re at risk of downgrades from credit rating agencies. It was only a matter of time before they got someone to take responsibility,” said Makarim Salman, an analyst at Jefferies, the independent investment bank.
Nomura’s lack of traction is evident in investment banking league tables, which show little improvement on rankings in 2009, the first year after the brokerage bought the European and Asian operations of Lehman Brothers.
Last year, Nomura ranked 13th in global M&A by total value of deals, according to Dealogic, fractionally ahead of Evercore, the advisory boutique. In equity capital markets, it was the 10th-ranked bookrunner by value. In debt underwriting, it finished outside the top 10 in almost all categories.
Mr Bhattal, 55, joined Nomura from Lehman Brothers in 2008. A former Rhodes scholar at Oxford university, he was head of Lehman’s Asian business at the time.
A spokesperson in Tokyo said Mr Bhattal’s resignation would have no impact on Nomura’s overall strategy to become Asia’s number one global investment bank.
Speaking on Thursday to the Nikkei Shimbun, Japan’s leading business daily, chief executive Kenichi Watanabe said the group would weather the market slump without disrupting its global network.
“Simply slashing personnel is meaningless,” he said. “We aim to trim costs without wrecking our global network.”
Mr Bhattal’s position will be assumed on an interim basis by Takumi Shibata, group chief operating officer and chairman of the wholesale division.
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