Walking into Nomura's Bank Street offices in Canary Wharf, the gleaming tower that used to be the Lehman Brothers building, you begin to realise the scale of the feat which Nomura have pulled off. Four months ago, few people not directly employed in the financial services industry would have heard of Nomura, now they are widely recognisable as one of the few success stories to have emerged from the credit crunch and the ensuing financial crisis which has grabbed the nation's attention. Perhaps too much attention as far as Nomura may be concerned. My Gateway colleagues and I are stopped by security at the building's revolving doors - an indication of how the Nomura-Lehman acquisition had developed into such a huge media story at the start of the autumn.
We were due to meet with Malcolm Horton over lunch. Climbing up to the top floor of the building, we exited the elevator onto a wide, spacious floor with a panoramic view overlooking the rest of the Wharf, and beyond it the City of London. The table where we were to take our lunch was immaculately decked out with a white table cloth and four place settings. It was clear that Nomura in its new guise was very much open for business.
The purpose of the lunch was to find out more about the integration between the Lehman staff who had been retained following the acquisition, and Nomura's existing European practises. In this regard, Malcolm had a unique viewpoint on the situation, having himself originally been an employee of Lehman Brothers, before the acquisition meant he was now overseeing Nomura's graduate scheme into the same regions. Our initial impressions of how Nomura were managing the consolidation of two very different financial firms were good - Nomura, one of Japan's leading banking groups, had been an established name in its field across Asia when the acquisition took place, but had yet to focus on expanding considerably into Europe and other markets. Lehman, by contrast, had been very much a European and North American focused firm. To our delight the first course served to us was Sushi, washed down appropriately with the very European accompaniment of French wine. As we settled into our Euro-Japanese dining experience we asked Malcolm for his take on the situation.
"One of the most remarkable elements of the takeover was the speed and surprise with which it took place. One of the main qualities of Nomura is that it has always been a very stable organisation and has not grown exponentially over the last few years. It took a lot of people by surprise when they announced themselves as the ones to take on a large part Lehman's, as nobody had expected it from them, but from the company's point of view it was a one-off opportunity that was too good to miss. It was the right time and the right deal for the firm to establish itself within the European market, so it grabbed it with both hands."
I pointed out that this must have come as quite a relief to those Lehman employees who would otherwise have found themselves out of a job. I was particularly interested in how the graduates who had recently started at the bank had found the transition from being part of the Lehman intake to becoming a Nomura employee overnight.
"For the graduates who had just stared it was certainly a shock - 90% were ex interns and had only been with Lehman for a matter of weeks. Though we were able to keep on a significant proportion of the graduates we weren't able to find room for everybody. It was a particularly difficult situation for me, as one of my main policies as head of graduate recruitment had been that unlike other banks we would never rescind offers or buy people out of their contracts before they started. We would always find a suitable position for them somewhere. Nomura is very similar in that you respect people in that way. If you have a contract with people then you honour that."
Malcolm had touched on an issue at the forefront of the minds of undergraduates looking at their job prospects over the next few months: intake numbers. How would he hold up to scrutiny on this topic from The Gateway?
"We may not be as aggressive in our hiring as Lehman had been but those we do take on will be important to us and are be going into key areas where they are needed. We are not hiring disposable people so, yes, the numbers are lower but each person we take on will be key to us. We don't need a massive pool of people. We can cherry pick and continue to move top professionals around the organisation where they are needed. There is a lot more focus. In a lean and mean time like this is that is the right model to have."
So numbers would be fewer than they had been at Lehman but stable, was the message we were getting, but like many people, we were keen to know what graduate life at Nomura would entail. There had been rumours in the press about how a firm with a strong 'Japanese' culture would integrate itself into a European banking operation. For graduates would this mean having a guaranteed job in Europe, or would the firm's Asian bias mean graduates moving to the Far East? My colleague, Richard, raised the question. Malcolm was certain with his reply:
"One of the biggest misconceptions people have about working for a Japanese bank is that there will be a very Asian working culture - hierarchical nature and long working hours, those kind of things. The way we like to see it is that we are an Asia-based bank with a European outlook, as opposed to being either totally US or Asia centric in approach. People are not used to seeing Nomura's brand outside of Asia high in the league tables but conceivably it will be next year. The brand will continue to grow globally and the culture will inevitably change, drawing the best sides of both organisations."
To us, this was one of the most interesting details of the acquisition. In taking over a firm who were not operating in a region where they already had a strong focus, Nomura had sidestepped one of the main problems which arises when there is consolidation between two firms operating in a similar space - overlap. Acquiring Lehman's European investment banking, equities and select fixed income divisions, Nomura have given themselves a new footing in areas where they didn't previously have a strong presence. In many respects they are starting afresh which means they have the advantage of being able to grow their firm organically at a steady pace. Malcolm summed up this attitude: "We have the luxury of being able to take our time and source out the best opportunities. Nomura owns its destiny. We have the ability to make our own decisions free from outside pressure; that is a great opportunity."
How the firms would look to seize new opportunities in the US was the next stage of our conversation. Organic growth would have a whole new meaning in regard to the US where Nomura had traditionally only had a very limited presence. Following the merger this was set to change. "How would this play out for graduates?", we wondered.
"One of the benefits of the working for a firm that is looking to grow into new parts of Europe and North America is that there will certainly be opportunities for UK graduates to work abroad. What differentiates Nomura is that we still have a lot of room into which to develop as an organisation, and the US is a key market for us going forward. In setting up our operations in The States we will undoubtedly have to call upon some of our European talent."
As the meal drew to a close, one thing still remained uncertain. Nomura's transition into new markets seemed to be moving forward quickly. How soon the firm would be fully up and running in Europe wasn't certain, though Malcolm thought it would be sooner than had first been predicted. The firm faced a huge challenge in incorporating two different sets of staff, different banking divisions and two very different organisations and cultures. So far they seemed to be doing a good job, though echoing Malcolm's words earlier, progress would be calm and measured rather than rushed. If Nomura's European operations were to inherit one thing from their Japanese relatives this would certainly be my top choice. That and the sushi.