Nomura’s record payday will not change Japan’s pay culture

Japanese brokerage houses have long had a reputation of paying less than global peers. But the country’s biggest is catching up. Nomura has handed one of its bankers, Christopher Willcox, the highest pay haul for a top executive at the brokerage. Just do not expect this to usher in a new era of bumper pay at Japan’s banks.

Willcox, who heads the Tokyo-based firm’s trading and investment banking, received $12mn for the year to March. That reflects growing net profits for the bank and broker, which rose almost 670 per cent in its latest quarter. Willcox’s salary would put Nomura on par with global rivals.

He is an outlier. Japanese banks and brokers have been known for lower pay relative to the rest of the region despite booming markets and record earnings in recent years. Willcox’s remuneration is more than triple that of chief executive Kentaro Okuda, whose remuneration for the year rose about a third to $3.2mn — still a small fraction of global peers. When sizing up pay awards, it does not help that a weak yen makes them look worse when compared in US dollars: the yen has weakened more than 50 per cent against the dollar since the start of 2021.

Nomura’s move will not mark a dramatic wider shift. In Japan, there is an unspoken limit on how high banker pay can go before sparking public disapproval. Local lenders and securities companies are keenly aware of bitter public sentiment on this issue. There are lasting memories of the nation’s banking crisis starting in 1997, during which the sector received significant amounts of government funds.

In any case, the forces behind this banker pay boost — soaring trading earnings and particularly strong performance in Japanese equity markets — cannot be counted on for much longer. Foreign investors have played a significant role in pushing Japanese stocks up to a record high in March.

This month, however, foreign investors have become net sellers, with the sell-off lasting for four straight weeks. There is a risk of a correction in Japanese equities in the short term, with Citigroup and Abrdn among those that have turned more pessimistic on local stocks.

Meanwhile, costs are rising for the Japanese brokerage sector, especially for investment banking businesses with overseas operations, thanks to inflation and yen weakness. The global investment banking business at Japan’s second-largest brokerage Daiwa fell to a loss in the latest quarter. Pay at Willcox’s level is unlikely to become the new norm.

june.yoon@ft.com