Will Nomura's Caution Catch On In US?

Can a new global bank emerge from the last big banking crisis to wrestle away business and prestige from bailout-tainted mega-banks? Nomura Holdings hopes so.

Positioning for dominance with the newly-added weight of Lehman's Asian, European and Middle East operations, Nomura has been accumulating talent, shoring up capital, and signaling its intent to expand in its current markets while developing opportunities in the US.

Nomura faces several short-term challenges. The brokerage wisely shut down its US-based mortgage-backed securities unit in 2007, but the subsequent downfall in the Japanese market -- due to Lehman -- forced the bank into a sell-off.

Recently, shares plunged on news that Nomura had sold 800 million shares, raising $5.6 billion, marking the second share sale in six months and the firm's largest equity sale to date. Investors are wary of equity sales, but analysts see them as necessary for operating costs. In particular, integrating Lehman required offering handsome bonuses to retain top talent in a newly competitive landscape.

The decision to shore up capital is timely. This week's G20 talks are weighing higher capital and liquidity requirements for banks. Thanks to Japan's 1990s banking crisis, Nomura already maintains higher levels of regulatory capital than required. That crisis made Nomura more risk-averse, a barrier to attracting the top clients who traditionally "want banks to risk their balance sheets, not just give advice."

Viewed through a pre-Lehman lens, the brokerage's Japanese roots could be a burdensome legacy. But though some analysts still see caution as a weakness, what might have been toxic to the brand two years ago may now be seen as a considerable strength.