Nomura’s co-head of international investment banking, Charles Pitts-Tucker, talks to Danielle Myles about expanding its corporate client base and how it is tackling the Brexit question head-on.

Charles Pitts-Tucker, Nomura

Nomura’s international operations have long been tipped as those most likely to reignite growth for the group. That prediction is now coming to fruition. In the 12 months to March 2017, Nomura’s overseas division posted its first profit since 2010 and recorded its best results since the Japanese bank started disclosing regional breakdowns in 2002.

The investment banking (IB) business spanning Europe, the Middle East and Africa (EMEA) is a key part of this turnaround. Led by Charles Pitts-Tucker, the division ended the year ahead of budget on the top and bottom line; revenues were higher, and costs lower, than forecast. Speaking with the department head at the bank’s London offices, it is clear there is still plenty of upside.

Room to grow

The firm’s European IB platform came into its own – and gained Mr Pitts-Tucker himself – in 2008 when it acquired Lehman Brothers’ regional franchise. The focus changed from, by and large, serving Japanese clients on their international endeavours, to developing a globally coordinated wholesale banking business.

Nine years on, Nomura is smaller than many other names in EMEA IB, but with a balanced offering. Revenues are not excessively reliant on any product, coverage or country team, meaning the bank is not at the mercy of a downturn in any particular market. “What I have been trying to do over the past few years is drive towards creating a business that doesn’t surprise on the downside, has steady growth, and is sustainable. And that is where we have got to,” says Mr Pitts-Tucker. “What we are focusing on now is how to inject more growth into the business”

In true Nomura style, this is being done selectively. The bank has expanded its corporate client base in recent years, and opened a Cape Town office in early 2016 which has performed well in its first 18 months. Mr Pitts-Tucker hopes to build on this success in South Africa. “I think there is much more we can do in emerging markets, but we will be very focused in where we spend our time,” he says. “And it will be done in coordination with our colleagues in global markets.”

Emerging markets aside, he expects growth to come from new products which leverage the IB’s skillset, and an expansion of existing business lines. Mr Pitts-Tucker is coy about where the best opportunities lie, but notes that Nomura is not short of options. “We have not yet maximised market share in any of our products, sectors or countries. So there is general growth potential in all our businesses in terms of gradually increasing our share,” he says.

Making an exit

A notable absence from this product mix is European equities. In 2016, the bank exited European equities research, equities underwriting and non-cash equity products (while retaining its equity solutions business and a sales team that distributes Japanese equity products). It made headlines for the resulting staff lay-offs, but while there was surprise and some immediate unease within other divisions, Mr Pitts-Tucker says the teams moved on relatively quickly. “That decision was made in April last year and truthfully, by the end of the summer we were up and running and people weren’t giving it a second thought, which I was extremely pleased with,” he says.

But the cessation of these activities did not happen in a vacuum. It meant an end to Nomura’s first steps in UK corporate broking, and removed the finance opportunities that arise from a strong equity franchise. “It was the right thing for the firm to do,” says Mr Pitts-Tucker. “But it meant that we had to figure out what we were going to do differently as there were parts of the banking business that relied quite heavily on the equity business.”

The most notable outcome is the creation of an equity advisory business. The move made sense on many levels. The European market is dominated by two players – Rothschild and Lazard – making it ripe for diversification, while Nomura has ex-initial public offering (IPO) bankers sitting in London who could advise on raising equity capital across Europe. It also has an array of ancillary services of potential use to issuers, including ratings advisory, equity solutions and sector teams.

This makes for a unique equity advisory offering. “We are the only global investment bank that can offer this service independently, as all the other major players obviously – and understandably – want to underwrite the actual IPO or block trade,” says Mr Pitts-Tucker. “We don’t,. We bring our value in providing independent and experienced advice on it.”

Since its launch 12 months ago, the business has won a strong set of mandates. It was sole equity adviser to Mexico’s Femsa on its sale of a €2.5bn stake in Heineken in September, and is rumoured to be advising on a number of IPOs in the Americas. “We now have underwriters coming to pitch to us, to make sure we are aware of their credentials when we are advising our clients,” says Mr Pitts-Tucker. “The momentum is excellent. It’s an area where we can be very effective.”

Integration and entrepreneurship

Nomura’s new direction in equities aligns with the brokerage firm’s solutions-oriented approach. It is not a commercial bank, meaning it lacks a big loan book from which it could generate relationship-based business. That, along with its size, means it must think carefully about where it can add value rather than trying to be all things to all people.

“We can’t afford to do that,” says Mr Pitts-Tucker, who was a lawyer with Allen & Overy before moving into banking. “Instead our strategy is to choose the spots where we have something valid and relevant to offer our clients, be it a smart product, a new way to access liquidity, a good refinancing idea, real insight or cross-regional connectivity. We have to lead with our strengths, win business on merit, and with our excellent products and solutions capabilities. Our bankers are confident that’s what they can do.”

Recent highlights include Heineken’s £1.2bn ($1.6bn) acquisition of Punch Taverns and Macquarie’s sale in March of its 26.3% stake in Kemble Water (the ultimate owner of Thames Water). In the weeks spanning the end of September and start of October, Nomura was bookrunner on more than €5bn of leveraged finance deals, including some of the year’s most high-profile contracts.

The focus on adding value is consistent with the sense of ownership imparted on those leading the IB’s individual teams. At Nomura there is a strong focus on the bottom line; each business is expected to be profitable on a standalone basis. “Every group head has ownership and accountability for their own businesses. They are responsible for devising the strategy for their team – which I ensure is in line with the strategy of the division – and understand their revenues, cost and bottom-line targets,” says Mr Pitts-Tucker, who in the past was chief operating officer of the European IB. “Of course there are natural limits as to how entrepreneurial you can be in a big organisation, but that is how I want them to think about their business: as if it is their own.”

This mentality extends to how the IB interacts with global markets, the other component of Nomura’s wholesale division. “We are absolutely joined at the hip,” says Mr Pitts-Tucker. “We have to put a premium on efficiency and coordination, and accessing people with the right skillset. Whether they sit in banking or global markets is almost irrelevant to us; we just get the right people on the trade.” 

Beyond Brexit

Nomura is among the first banks to confirm where it will build its EU headquarters post-Brexit, having announced in June that it had chosen Frankfurt. Mr Pitts-Tucker cannot speak highly enough of the firm’s response in such an uncertain environment. “I think the team here has done a fantastic job and I genuinely think we are incredibly well organised around it,” he says. “We have a very clear contingency plan within which we can respond to all scenarios – including a hard Brexit – I think extremely well.”

This can-do approach to Brexit is emblematic of the stage at which Nomura’s EMEA IB finds itself today. “We have achieved a lot in the past few years, but have we achieved everything we want to achieve? No,” says Mr Pitts-Tucker. “That is an enormous motivating factor, and something we can do only if we work very closely together.”

PLEASE ENTER YOUR DETAILS TO WATCH THIS VIDEO

All fields are mandatory

The Banker is a service from the Financial Times. The Financial Times Ltd takes your privacy seriously.

Choose how you want us to contact you.

Invites and Offers from The Banker

Receive exclusive personalised event invitations, carefully curated offers and promotions from The Banker



For more information about how we use your data, please refer to our privacy and cookie policies.

Terms and conditions

Join our community

The Banker on Twitter