Nomuras two top executives have quit following the
banks alleged involvement in an insider trading scandal
in Japan, prompting uncertainty about the troubled
banks future strategy.
Kenichi Watanabe, chief executive officer, and Takumi
Shibata, chief operating officer, have resigned. The two men
were instrumental in Nomuras takeover of the non-US
operations of Lehman Brothers.
Watanabe, who joined the bank in 1975, is replaced by Koji
Nagai, who is currently president of Nomura Securities.
Atushi Yoshikawa, currently regional head of the Americas,
will assume the role vacated by Shibata.
Last month, Watanabe was given a six-month salary cut, while
Shibata was given a five-month cut. The insider trading
allegations are that some bank staff leaked information on
share offerings to customers before that
information became public. Sources said the two had come
under mounting pressure to fall on their swords, particularly
given the banks exclusion from several recent bond
deals and mandates.
Analysts immediately reacted by saying that the
management changes mean Nomura will retrench to its home
market and largely abandon the strategy it has been pursuing
for the past four years. That is probably
an overstatement. Certainly the changes are likely to
mean a shift in strategy and more job cuts can be expected,
particularly in the banks equity franchise. But Europe
and, to a lesser extent, the US, are areas the bank cannot
simply walk away from given the investment it has already
The management shake-up and the departure of the top two
a cataclysmic event for the bank
, came as it
announced that group net profit had plunged 91% on the
previous quarter. The group has largely struggled
for profit in the past three years. The departures are
thought to be primarily due to the reputational and business
damage done by the insider trading allegations as opposed to
the groups run of poor profitability more generally.
The management of Nomura has been criticized for the
banks performance, particularly in Europe and the US,
as it sought to increase its global reach. It remains a
powerhouse in its home market but has slipped back in some
other parts of Asia.
Nomura is in 16th position in the tables for global
investment banking fees over the year to date, according to
Thomson Reuters and Freeman Consulting.
On announcing the management shake-up, Nomura said it faced a
rapidly evolving business environment marked by instability
in Europe and global regulatory tightening.
It said under the new leadership, the bank would build a
new global business model designed to allow the
firm to remain flexible and adapt
quickly to the changing environment
. It added that
it would remain committed to growing Asias global
investment bank again, suggesting that the thrust of
its strategy in future will be closer to home.
Among other casualties of the shake-up are Philip Lynch,
head of Asia, and Hiromu Yamaji, chairman of banking.