Japanese banks can occasionally be accused of a kind of institutional ennui: they know they’re supposed to do something, but everything just feels pointless.
They know they should expand overseas but the sheer size of their domestic loan books means shifting the needle feels impossible. They know they’re meant to look for new sources of revenue but, in a domestic market defined by negative interest rates and negligible growth, those opportunities seem impossible to find.
Nomura has always seemed the bank most determined to change the narrative. Its acquisition of Lehman Brothers is now remembered as a failed experiment in bringing together two very different cultures – but its decision last year to appoint its first CEO from the investment banking ranks is likely to have the longer-term impact.
Kentaro Okuda, a Nomura lifer but a man with no experience of retail banking, was picked for the top job in April 2020. He has already shaken things up. Okuda has taken a mature and sensible approach to the pandemic, pointing out that many staff should still work from home after the coronavirus subsides. He has also steered the bank into the businesses he knows best, with impressive results.
Okuda has bet on private debt and private equity to fuel Nomura’s profit growth. That helped the bank post its highest-ever third quarter earnings this week, despite a huge cost-cutting programme that is draining resources — and attention — from crucial business lines.
Western bankers have occasionally treated taking a job at a Japanese firm as a partial step into retirement, trading the glitz and glamour of the Wall Street firms for a decent package and a senior management that is often reluctant to make big changes. Nomura has always been seen as a better move than the megabanks — but not by a lot.
It is too early to say whether Okuda has cracked the code. But one hint will be the desire of swashbuckling bankers at other firms to join his project. Whether he will want them or not is another question.