Brian O'Connor leaves Nomura

The former CAO/COO of Lehman Brothers Asia has left Nomura for a yet-to-be-disclosed new job in Singapore.

Nomura's vice-chairman of Asia, Brian O'Connor, announced by internal email on April 30 that that day would be his last at Nomura. O'Conner was initially from Lehman Brothers and, together with Lehman's former Asian CEO Jasjit Bhattal, was one of the architects of the integration following Nomura's takeover of Lehman's Japanese and European operations in October last year.

O'Connor is moving to Singapore but will be enjoying four months' gardening leave ahead of his next job. The name of his new employer is not known, but O'Connor is reportedly moving into a banking/business function, which is where he started his career.

"Today is my last day. I am grateful that for the vast majority of my 19 years (at Lehman), I have been excited to go to work every morning. I close this chapter proud of what we as a team accomplished in building a truly great franchise and ultimately having Nomura recognise our collective excellence," he writes in the email.

O'Connor has close connections with Southeast Asia where he started his career, at one point being head of banking for Indonesia for Lehman. He did Asian Studies and Economics as a student of the University of California Berkley.

Colleagues remember O'Connor fondly for the stance he took during the negotiations with Nomura. As members of the Lehman executive committee faced off against Nomura, Bhattal, O'Connor and Tarun Jotwani (country head for India at Lehman and now global head of fixed-income at Nomura) turned down the opportunity to lock into contracts which were much longer than those offered to their colleagues who were not on the executive board. In the end, everybody got contracts of the same duration, according to a former Lehman banker.

An unusual aspect is that O'Connor is leaving a lucrative contract, namely a two-year arrangement with a guaranteed bonus set at bonus levels two years ago. This contract only runs out in 2010 and was granted by Nomura to top Lehman staff in an effort to reconcile them to working at a Japanese bank. Some senior staff, such as O'Connor, were reportedly paid on April 1.

According to one recruiter, a vice-president in equity technology would have received a base salary of at least ¥16 million ($161,000) and ¥25 million in bonus two years ago, while a vice-president in sales and trading would have earned the same basic salary and ¥50 million in bonus. The recruiter adds that for most of the Nomura staff, just over two-thirds of the bonus was paid on March 15, with the rest due to be paid in October. The intention of splitting the payment into two was to stop a mass exodus, he says, although some Lehman bankers did jump ship in March, since even two-thirds of a bonus from two years ago was very rich.

An informed source says O'Connor left Nomura voluntarily, which may mean that at least some banks are hiring again, and are preparing to pay compensation even greater than what O'Connor was getting paid at Nomura.

"Finding jobs in finance is certainly a problem, but there has been a flight to quality. There is a strong bid for China and a strong bid for bankers with top quality restructuring and workout skills," says one banker. "If you look at compensation levels at the banks which announced earnings for the first quarter, they are running at the same levels as two years ago," he adds.

Alternatively, O'Connor might set up a boutique investment or advisory firm on his own, as some former Citi bankers have been reported doing.

Former colleagues speak with enthusiasm of O'Connor who spent 19 years at Lehman Brothers, initially as head of corporate finance for non-Japan Asia. In 2004 he took over the joint roles of chief administrative officer and chief operating officer for Asia. "He did a fantastic job with the merger, and he's now leaving on the crest of a wave. His mission is finished, and he's gone to somewhere new," says one former Lehman and Nomura colleague.

During his time as vice-chairman for Nomura, partly based out of Hong Kong, his role involved senior customer relations and strategic integration.

One banker who worked alongside O'Connor, says that he had a key role in negotiating the conditions of the takeover. "He delivered a great deal to his Lehman colleagues and afterwards, when they joined Nomura, he ensured that they stayed motivated and focussed," the banker says.

O'Connor also played a crucial role in IT systems integration, especially relating to electronic trading via direct market access (DMA) and algorithmic trading. Lehman Brothers had a cutting edge equities electronic trading system which he helped integrate with the much less capable systems at Nomura. "There were some 3,000 systems which needed to be transplanted and merged," notes the former colleague.

The integration's 'heavy lifting' has been done, according to the same source, and the challenge now is for the 'fancy stuff' to be launched. "At the beginning of the integration, Nomura used the 'band aid' approach to get the systems talking to each other. Now they are gradually devising new systems which integrate the two previous systems," he says.

The basic stuff is thus in place, in terms of opening accounts, booking trades and ensuring money changes hands in the right amounts and at the right times, but the super sophisticated stuff that takes huge computing power, such as fast structuring and pricing of exotic derivatives based on many different variables (such as the Nikkei, the value of the yen etc) is not yet fully up and running. That could take years, says the source. There is also an ongoing dispute with Barclays, the owner of Lehman Brothers' former US operations, concerning who owns which parts of the IT infrastructure. This is likely to be a drawn-out affair.

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