Nikko puts Brit in charge of international business
Appointment of Westerner follows gangster scandal, writes Liza Roberts
Sunday 12 October 1997
Coming as it did after Nikko's president, chairman, and six other executives resigned for alleged involvement in a gangster pay-off scandal, the appointment of a "foreigner" represented new thinking at one of Japan's so-called Big Four brokerages, Mr De Carvalho said.
Nikko's new president, Masashi Kaneko, said last week Mr De Carvalho will probably join Nikko's board. The British executive is likely to shake things up.
"Promoting a non-Japanese to head up international operations will bring them into the 21st Century," said John Langton, chief executive of the International Securities Market Association in Zurich.
Mr De Carvalho is the highest-ranking European ever at a Japanese financial institution, and one of only a few non-Japanese to hold such a lofty post. He's bringing some decidedly Western ideas to the job.
In one of his first moves, Mr De Carvalho sent a memo to his colleagues in other regional offices.
"Let's work towards a common bottom line, with a partnership spirit," Mr De Carvalho recalled dictating. The memo prompted a call from an employee in Nikko's New York office, who said he was pleased to be working under his first non-Japanese boss. "I said, no, I'm your first non-Japanese partner."
A team approach has been absent from Japanese firms, Mr De Carvalho said.
"They're very hierarchical. We have to get everyone thinking that we are working together. We cannot have an island mentality. That has to stop."
Nikko should also become a meritocracy, he said. "The top quality Nikkko employees need to have the same benefits they would at a Merrill Lynch." He explained that meant commensurate remuneration, "job satis- faction", and the ability to "jump ahead" of their peer group when they had earned it.
Still, that is not going to go down easily with the raft of middle managers who have spent their lifetimes in a more regimented culture, according to Sadao Sasaki, manager of Japan Export and Trade Consultants, a US consulting firm that advises Western business people on working in Japan.
"If he insists on using European or Western-style business practices, friction will definitely occur," he said.
While Mr De Carvalho and Mr Kaneko see Nikko's future in new ideas and international standards, the success of those changes will rely to some degree on employee acceptance. Mr De Carvalho wants to "replace size with smart", and emphasizes that no "planeloads" of people are coming to join him in London as it forms Nikko's new international base.
"Probably for the next five, 10, 15 years, investment banking is an Anglo- Saxon business," he said. "It's in the culture, and London has attracted some of the best people in the business."
Mr De Carvalho has worked in the City for almost 25 years, 15 of which were spent at Credit Suisse First Boston, where he worked on Eurobonds. From April 1995 until last week, he served as co-chairman of Nikko Europe, together with Mr Kaneko, and as global head of Nikko's capital markets outside Japan.
Mr De Carvalho does not speak Japanese, does not plan to learn it, and tells his colleagues not to bother trying. It just takes too long for an adult to learn to speak it well, he says.
A father of five, 53-year-old Mr De Carvalho is a former member of the British Olympic luge and ski teams - he competed in the 1968 Grenoble games, the 1972 Sapporo games, and the 1976 Innsbruck games. He still bikes up to 4,000 miles a year in preparation for races like the Tour de France one-day amateur competition.
"Smart" will be an important factor as Nikko works to surmount this year's gangster-scandal and tomorrow's structural changes. Japan's so-called "Big Bang" - which will open the domestic financial services industry to unprecedented foreign competition - is four years off, and it means Nikko's international operations need to add value.
Nikko's new president gives Mr De Carvalho his full support for importing Western ideas and a global perspective to the business. "We have much to learn from the opinions of US and European corporate managers," Mr Kaneko said last week.
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