2012 has been a kind year for fixed income professionals. In the third quarter, industry-wide fixed income currencies and commodities (FICC) revenues rose by 80% year-on-year after accounting changes according to analysts at Morgan Stanley and Oliver Wyman. At Bank of America, third quarter revenues rose by a crazy 700% over the same period.
Tom Montag (president of global markets), Sanaz Zaimi (global head of FICC sales) and Bernie Mensah (EMEA head of FICC) at Bank of America, all have reason to feel pleased with themselves. However, the real winner in fixed income during 2012 has been Steve Ashley at Nomura.
Ashley’s rise at the Japanese bank has been meteoric.
After joining Nomura from RBS in February 2010, Steve Ashley spent 10 months working for the bank in Tokyo. At the time of his relocation, it was suggested that Ashley was moving to Japan to escape the higher rate of income tax in the UK. In fact, it seems that Ashley’s time in Tokyo was a strategic move to see how Nomura functioned in its home market.
By July 2011 Ashley was back in London and in January 2012 he was suddenly made Nomura’s global head of fixed income after Jesse Bhattal and Tarun Jotwani, the ex-Lehman bankers who’d run the investment bank and the fixed income trading business, were unexpectedly let go. It later transpired that Bhattal and Jotwani had been pushing an ambitious scheme to buy Italian government bonds, and that this was not supported by Nomura’s conservative Japanese leadership.
Having usefully spent time in Tokyo, Ashley was trusted by Nomura’s top men. After being promoted in January, he cleared Nomura’s ranks – making 30 fixed income managers redundant and dispensing with leading Lehman fixed income bankers like George Assi, his deputy. At the same time, headhunters say Ashley hired a lot of new people in – especially from RBS, where he worked for six years as global head of delta interest trading and flow credit trading. “Steve has hired around 50 people from across the market this year,” says one fixed income headhunter, ” – in everything from sales trading to structuring, research and origination.”
Ashley’s recruits include Gary Cottle from RBS, who joined in August as head of fixed income from EMEA. He’s also hired Jon Linton as head of macro products in Australia, Pierre Gourmet, an RBS rates structurer, as head of rates structuring for EMEA, and James Duncan, an RBS euro options trader into a similar role at Nomura. RBS wasn’t Ashley’s sole hunting ground: people like Tim Owens have joined from JPMorgan, as global head of FX structuring.
Ashley’s fixed income preeminence was impressive enough, but last week his position was sealed with yet another promotion: this time as co-head of global markets. For a British banker in a Japanese bank which has been going back to its Japanese routes, it marks the end of an impressive 12 months. Last week’s promotion was also the final displacement of ex-Lehman bankers from positions of power. Benoit Savoret, the ex-Lehman banker who had been co-head of equities at Nomura was simultaneously downgraded to an advisory role. The new head of equities is Japanese banker Naoki Matsuba. Instead of ex-Lehman and the Japanese, it’s starting to look like Nomura is run by ex-RBS and the Tokyo elite.
In the circumstances, Ashley might appear a highly political operator. However, headhunters and insiders assure us this isn’t the case. Nomura declined to comment for this article and Ashley was unavailable for interview, but indications are that Ashley was promoted on merit rather than Machiavellianism. Nomura’s share of fixed income sales and trading revenues rose from 2% in 2009 to 3.5% in 2011 (excluding accounting adjustments) and was higher again at 4.3% in the three months ending September. In the nine quarters to September, fixed income accounted for 65% of Nomura’s wholesale revenues. This has been achieved despite Nomura’s poor credit rating, which discourages fixed income counterparties from doing business with the bank. “Steve Ashley’s success at Nomura is not a coincidence, but the result of hard work and a deliberate strategy to focus on the bank’s successful businesses within fixed income,” said Jason Kennedy at search firm Kennedy Group.
Unusually, everyone we spoke to was unanimous in their praise of Ashley who appears widely respected and is held to be a ‘nice guy.’ “He’s hugely respected by the people who work for him, is very down to earth, doesn’t micromanage and really understands the business. People tell me Steve is the best guy they’ve ever worked for,” says one fixed income headhunter.
“He’s a very good trader who runs his staff well and inspires incredible loyalty in people,” said another headhunter. “He’s an excellent macro risk taker and he really knows how to make money.”
The combination of trading excellence and personal niceness is rare. If Ashley’s still hiring in 2013, he may find a queue of people waiting to work with him.