Jesse Bhattal, the highest-ranking ex-Lehman Brothers executive at Japanese investment bank Nomura Holdings, resigned on Tuesday after the wholesale division he led suffered heavy losses.
The loss of Bhattal is the latest blow to Nomura’s ambitions to join the elite ranks of global investment banks following its acquisition of Lehman’s European and Asian operations after the storied Wall Street firm collapsed in 2008.
Bhattal, 55, was chief executive of Nomura’s wholesale division, which fell deep into the red in July-September as fees slid across the investment banking industry, prompting Nomura to launch a $1.2 billion cost-cutting drive.
Nomura said Bhattal had decided to retire from investment banking and would also resign as deputy president of Nomura Holdings.
Takumi Shibata, Nomura’s chief operating officer and the architect of the Lehman acquisition, will take over Bhattal’s responsibilities for now, while leading the search for a permanent successor, the company said in a statement.
India-born Bhattal was the former Asia Pacific CEO for Lehman. When Nomura swept in and bought Lehman’s Asia business, along with its Europe, Middle East and Africa unit, Bhattal served as not only the key legacy Lehman figure at the bank, but also a seasoned international banker who would play a key role in pushing Nomura into markets outside Japan.
Nomura’s deal for Lehman was signed in September 2008, just a week after the Wall Street brokerage filed for bankruptcy. At the time, Lehman had some 3,000 employees in Asia in 10 offices, with roughly 1,300 in Tokyo and 800 in Hong Kong.
To keep Lehman bankers from leaving at the year-end, Nomura offered a wide range of guaranteed pay packages to ex-Lehman staffers, irking legacy Nomura bankers and jacking up costs at the bank.
BIG IN JAPAN, BUT …
While Nomura succeeded in certain areas and continued as the dominant investment bank in Japan, its league table status outside Japan never really showed it gaining much ground on the major banks.
Nomura ranked first in Japanese equity capital markets in 2011, working on $6.8 billion worth of deals, but outside its home base it ranked just 32nd in Asia Pacific, according to Thomson Reuters data.
“Investment banking remains dominated by U.S. and European banks, and it’s been very difficult for any Asian bank to break into the industry,” said Ronald Wan, managing director at China Merchant Securities in Hong Kong.
“Japanese banks’ influence has also weakened since the 1990s, and they’ve had a lot of trouble trying to gain enough traction here in the region.”
With Bhattal gone, there are now just four ex-Lehman executives left among Nomura’s senior management: William Vereker, who is joint head of investment banking, Tarun Jotwani, head of global markets, John Phizackerley, CEO of the EMEA regional business, and Philip Lynch, CEO for Asia ex-Japan.
Bhattal’s resignation comes after the wholesale division’s woes pushed Nomura to a net loss of 46.1 billion yen in July-September, its first quarterly loss since January-March 2009.
After posting the loss, Bhattal told Reuters in an interview that conditions in the investment banking industry were as tough as during the 2008 financial crisis.