Nikko Cordial Securities, the brokerage and investment banking unit of Sumitomo Mitsui Banking Corporation, has announced plans to increase global staff numbers by 14 per cent (about 1,000 people) between now and the end of March 2013.
According to a Bloomberg report, the hiring surge is aimed at tapping into what the firm expects will be increased demand for underwriting securities and advising on takeovers in Japan.
It’s also part of Nikko Cordial’s wider strategy to establish itself in the upper echelons of Japan’s brokerage elite, says Warwick Pearmund, a consultant at Slate Consulting, who has been working with the firm to fill positions in Japan and overseas.
So what are its chances of success?
Paul Guevara, a senior consultant at recruitment firm Boyd and Moore, says of all the domestic banks, many analysts think SMBC has the best looking fundamentals – in addition to deep pockets to draw from – to support the planned Nikko expansion.
The success or failure of the brokerage business, he believes, will rely on its ability to attract and retain key senior managers from other large banks, as well as its capacity to spend money in order to piggy-back on some of the advanced trading technology its competitors already have in place.
“If they can do all this and do it quickly, they may stand a chance to capitalise on their competitors’ misfortunes and gain market share, and may be in a strong position three or four years out,” says Guevara.
Pearmund says Nikko have already put in place many senior Japanese staff, and have been active in areas such as equities, fixed income and investment banking.
But given Japanese firms’ reputations within the industry for relatively low compensation by international standards, will Nikko be able to compete in the race for top international talent? The answer to that is yes, says Pearmund.
“Every firm recognises that if they are going to be an industry leader, they are going to have to invest in talented people. I’ve not found it a difficult sell at all. In my view, if they continue to do this right, Nikko Cordial are on course to be one of the top three Japanese brokerages globally, alongside Nomura and Daiwa, within the next five years,” he adds.