Regardless of whether the Financial Times got it wrong when it said Nomura was shifting its international headquarters out of London and into Tokyo, one thing is sure: Nomura’s Japanese origins are going to be far, far more in evident in future.
Keniche Watanabe, the former CEO who led Nomura’s acquisition of Lehman’s international operations, is gone. So is the Pakistani former EMEA CEO, Sadeq Sayeed, who worked with Watanabe to negotiate the purchase of Lehmanb’s London businesses for $2. So is the Indian investment banker Jasjit “Jesse” Bhattal, once Nomura’s highest-ranking foreign executive and joint deputy president.
Instead, Nomura is now led by a new Japan-focused chief executive Koji Nagai, former president of Nomura Securities, the bank’s domestic Japanese brokerage. And Nagai has been making it very clear that things at Nomura are going to change.
Alongside that interview with the FT, an interview with Nagai also appeared in the Wall Street Journal yesterday. Although Nagai’s English is sometimes poor he won’t appear to brook any corrections – the Wall Street Journal appeared compelled to publish Nagai’s answers to its questions in full, with the rejoinder that they had “been edited” – likely by Nomura as a condition for the interview. Despite this, Nagai clearly communicated that he: plans to rebuild Nomura from the bottom up, that cuts are coming to cash equities, and that the loss of Lehman bankers is no big deal because Nomura has no need of “high profile names”, or, “a business track record.”
In an organisation where ex-Lehman bankers were hired four years ago on generous two year guaranteed bonuses, often matching their 2007 packages, Nagai’s changes are likely to come as a shock. Although some former Lehman bankers have left Nomura in recent years, many haven’t: 30% of Nomura’s staff are still ex-Lehmanites. Assuming they don’t lose their jobs in the $1bn of cuts that Nomura’s implementing in its wholesale division before March 2014, they need to be ready for the rapid Japanification of their employer if they want to thrive.
Tea ceremonies, squat toilets
Japanese culture has caused issues among Nomura’s international bankers in the past.
In 2009 it became apparent that some of Nomura’s female trainees in the US appeared to have been discriminated against. Among other things, they complained about being trained in how to pour tea, how to wear their hair and how to choose their work clothes. Female trainees had email addresses changed from maiden to married names and were asked not to have highlights or to wear brightly coloured clothing in the office.
Less seriously, there was also a facetious request from a shareholder a few months’ ago, who suggested that all toilets in Nomura’s offices should be changed to Japanese-style squat toilets in light of the company’s lack of money and need to, “hunker down.”
Modesty, team work, long hours, low bonuses
Cultural experts stress that Japanese culture is very different.
“Our attitude to life is very different,” says Akemi Solloway, a cultural consultant and daughter of an old samurai family. “We don’t have any religion and that makes a big difference to how we think. Japanese people have to be very modest, not arrogant, and to put other people’s feelings first.
“Showing respect, modesty and politeness are very important,” Solloway adds.
Bill Reed, a specialist in inter-cultural management issues related to East Asia, Japan, Korea and China, says Nomura bankers need to be ready for several changes if Japanese culture becomes more prevalent in London.
Firstly, Reed says decision making processes will elongate. Secondly, hierarchies will get steeper. Thirdly, any manifestation of arrogance will be frowned upon. “The Japanese are strongly collective culture,” says Reed. “They don’t like individuals boasting. If you boast, you will be kicked out of the group. Your individual needs must be subservient to the group as a whole.”
As per the myth of the exhausted Japanese salary man, Reed says the Japanese also work hard: “They work long hours and there is a degree of presenteeism. They are intensely dedicated to their company in a way that Westerners often find hard to understand.”
Because Japanese banks emphasise the team as opposed to individual achievement, investment banking bonus culture is also inimical to Japanese banks. Staff appraisals in Japanese banks are also more likely to be top down than 360 degree, says Reed: while western banks like to give employees an opportunity to draw attention to their achievements, Japanese banks see that negatively and expect managers to assess an employee’s merits themselves.
Finally, Japanese banks value loyalty and length of service. This is typically a more certain route to high pay in Japanese culture than banging your own drum before bonus time.
And if you are asked to participate in a tea ceremony?
If you are asked to take part in a tea ceremony – as seems to have happened at Nomura in the US in the recent past – Akemi Solloway says it’s worth being aware of its importance to Japanese culture.
“The 15th century tea ceremony is important in Japan – although not everyone knows about it,” she says. “It is practised without an electric kettle, because there was no electricity in the 15th century. It is about teaching you how to live and how to appreciate art, like appreciating the pottery and the calligraphy.
“Western people are often quiet during the tea ceremony,” she adds. “They usually want to watch and learn more about it.”