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Daiwa understands investment bankers a lot better than Nomura

As we noted back back in February , 2009 is shaping up to be the year of the Japanese bank. This remains the case three months on.

Despite making big losses after acquiring parts of Lehman’s ex-US business, Nomura is hiring across the board. Mizuho says it aspires to recruit corporate financiers (even if it is uncommitted to bringing anyone on anytime soon). And Daiwa has now acquired Close Brothers Corporate Finance and asserted its intention to grow across investment banking, equities, fixed income and derivatives.

Surprisingly perhaps for a Japanese bank with a comparatively small operation in Europe, Daiwa is showing itself highly attuned to the ways of the investment banker. In the process, it is putting its larger rival Nomura to shame.

When Nomura set about wooing former Lehman bankers in Europe last year, it did so with generous guaranteed bonuses, a high proportion of which paid out within 12 months. As a result, the bank is now saddled with uncomfortably high compensation costs and little certainty that the people it paid for will stick around once their guarantees expire.

Daiwa is proving a little more circumspect.

According to reports, Daiwa is tying in Close Brothers’ corporate financiers with a scheme promising them a greater share of profits, but requiring a five year wait before it divests.

Daiwa appears to have spare cash for new recruits as a result. Rumour has is that the bank has a generous war chest with which to supplement the Close Brothers’ business, and that it’s offering guarantees.

The smartest of the Japanese banks may, however, be Mizuho. By signaling its intention to hire before it’s ready to do so, Mizuho has ensured a steady flow of CVs. If and when it decides to increase headcount, it will have a readymade database of possible candidates, all of whom are probably going for a pittance.

Comments (6)

  1. Interesting article. And yes the deal puts my employers to shame – not that I’m complaining with my decent bonus! However, whilst you are right about Mizuho being clever on its intention to hire bankers I think you will find Daiwa did something similar with its Derivatives operation last year, grabbing some big names. 2009 certainly is the year of the Japanese bank as you say Sarah – for Daiwa and Mizuho it seems to be good – not so sure about my own outfit mind you!

  2. There was an article a while back called ” can Nomura afford lehman people?”. Seem quiet suitable now.

  3. HAHA! Lots of angry people at Noumra I suspect! Their thunder has been stolen and shown for what it was – a mess! This seems altogether a much more reasoned acquisition.

  4. Agree with Jeff this seems quite a reasonable approach, as does that of Mizuho. Have never worked for a Jap firm but wouldnt mind given they seem to be investing. Any offers greatly received! And, before anyone else says it, ‘is Daiwa the new Goldman?’ – there, out of the way!

  5. Wouldn’t neccesarily say Daiwa know bankers better, they are totally different situations – one in the most heated week in banking history, the other a long, well thought process. Also, Nomura and Daiwa are probably trying to achieve different things, Daiwa will be aiming for a mid-market M&A position, perhaps as an add-on to its existing operations. Whereas Nomura is trying to build a full service investment bank for the large corporates (albeit currently with very little US presence), the targets are vastly different. Also I think it is possible that given the anticipated competition from Barcap, Nomura may have effectively overpaid to ensure they made a landmark acquisition – rather than being caught short like they had done historically. Time will tell but Nomura is the one with the best chance of the big revenues.

  6. @joeyG go for it there are Headhunters and recruiters specializing in Japanese businesses

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