Finally there is some hope for the 2,000 odd employees of Lehman Brothers’ back office in India. In a significant development, Japanese securities house Nomura Holdings Inc has reached a basic agreement to purchase Indian units of Lehman Brother, Japan’s Nikkei business daily reported on Friday.
The Nikkei reported that Nomura would take over the information technology development and back-office operations of Lehman Brothers as well as more than 2,000 employees in India.
The Japanese firm has already accepted about 3,000 workers from Lehman Brothers’ Asia-Pacific units and some 2,500 employees from Europe and the Middle-East to join Nomura, the newspaper said.
Lehman Brothers’ Indian operations included tasks such as procedural work entailed by securities transactions besides IT development.
Last month, Nomura had agreed to buy the Asia Pacific units of Lehman Brothers Holdings, which also included the Indian investment banking unit. However, it was silent on the fate of the BPO arm, which employed about 2,000 people.
The latest development of Nomura taking over the BPO arm will be a great relief to the Indian workforce of the bankrupt US investment bank.
To Retain Lehman’s Talent
Meanwhile, Nomura Holdings Inc. has guaranteed that bankers in the Asian operations of Lehman will continue to receive the same level of pay, Wall Streey Journal reported on Friday. This is an attempt to stall the exodus at the bankrupt Wall Street bank as the Japanese firm is set to take control of its Asia Pacific operations.
Nomura, which late last month bought Lehman’s Asian business for $225 million, has offered to peg bonuses and salaries for Lehman’s 3,000 employees across Asia at last year’s level for the next year or two, depending on the banker’s performance, WSJ reported, quoting people familiar with the development.
Bonuses will mostly be in cash with some stock. In fact, Nomura has given the employees of erstwhile Wall Street bank today’s deadline to sign the employment contract. There are 175 people employed in Lehman’s India office (not including back office).
According to The Economic Times report, the top level officials at Lehman India may walk away with upto $30 million in bonus collectively. This will include the India head Tarun Jotwani, Surojit Shome (I-banking head), Pankaj Vaish (equities head) and Prabhat Awasthi (head of equity research), and some others. The top guys are expected to be paid a bonus of seven figures in dollars.
Nomura has reserved $1billion to pay Lehman’s top employees as bonus in order to retain them in Asia and Europe. The same is being offered to the employees in Europe. But the bonus might be a little late this year. While Lehman pays its bonus in November every year, Nomura will pay in March.
Wall Street Journal has reported that the Nomura may face problems in retaining the talent as the management and working style is very different at both the firms. While Lehman’s atmosphere is more entrepreneurial with snap decision making, Nomura’s emphasises on consensual decision making. Also some employees maybe asked to leave.