(Bloomberg) -- Christopher Willcox spent decades rising through the ranks at Wall Street firms before landing at Nomura Holdings Inc. during one of the most tumultuous periods in the Japanese brokerage’s history.

Now, just 17 months after he arrived at Nomura to help run its US business, Willcox is tasked with turning around the firm’s global investment bank. He takes over on Saturday from Steve Ashley, 55, whose tenure was marked by overhauls, strategy changes and roughly $2 billion of losses tied to the implosion of Bill Hwang’s Archegos Capital Management.

Willcox, 54, a veteran of JPMorgan Chase & Co. and Citigroup Inc., will inherit a business that’s changing tack after some of its most challenging years, that also saw it post losses on trades linked to UK inflation and face costly litigation in the US. Nomura is trying to cut its reliance on income from volatile trading for more stable revenue streams such as advising clients on deals -- which has doubled over the past two years -- and wealth management.

“After the Archegos incident, wholesale banking hasn’t recovered,” said Pramod Shenoi, head of Asia-Pacific financial research at CreditSights Inc. in Singapore. “It doesn’t come as a surprise that the firm has brought in new leadership which it hopes would be able to deliver better results.”

Chief Executive Officer Kentaro Okuda is counting on Willcox to bolster a wholesale business that generates roughly half of the brokerage’s total revenue, and spans trading, underwriting as well as advising on mergers and acquisitions. 

Willcox’s “experience in asset management and investment banking is a good match to Nomura’s strategy to shift its business to a broader asset management, advisory and solution-oriented services in all of its segments, including the wholesale division,” said Kaori Nishizawa, director of financial institutions at Fitch Ratings in Japan. 

Nomura’s shares are down 4.6% so far this year, compared to a 5.49% gain for the Tokyo Stock Exchange’s Topix Banks Index.

Fast Track

The British national, who had planned to retire in 2019, joined Nomura as co-chief executive officer of its Americas unit, weeks after the brokerage warned it may incur losses tied to a US client, and became sole CEO of that unit in April this year. He will continue to be New York-based, while Ashley was based in London.

Willcox’s rapid ascent is particularly significant, according to Michael Makdad, an analyst at Morningstar Inc. in Tokyo, because he will become the first non-Japanese to become an executive officer of the holding company. 

Still, he “could face challenges working with a larger group of mixed cultures in Nomura globally,” given that his experience with the brokerage has been in the US, according to Fitch’s Nishizawa.

A spokesperson for Nomura declined to comment.

Willcox’s predecessor, Ashley, will become chairman of Nomura’s new Swiss crypto venture, Laser Digital Holdings AG, that will focus on digital assets -- an area that Okuda has called a “critical part” of the firm’s efforts to bolster profit. 

A veteran of the City’s so-called rates-trading scene that buys and sells of products tied to interest rates, Ashley joined Nomura in 2010 at a time of flux. Nomura had just bought Lehman Brothers Holdings Inc.’s European and Asian businesses in a bid to become a global competitor to industry giants like Goldman Sachs Group Inc. and Morgan Stanley. 

Those ambitions faded as the brokerage grappled with the costs of legacy purchases, an era of record-low interest rates and increased capital requirements from regulators. But the firm also had problems of its own making, particularly in London where the bank often relied on rates traders making outsize bets.

Warning Signs

During his tenure, Ashley’s strategy shifts included shuttering the firm’s European equities business in 2016 and establishing the client financing and solutions unit, which tailors complex deals. But the wholesale segment struggled to boost profit or revenue and Nomura’s overseas business -- which is primarily made up of wholesale operations -- has lost money eight out of the past 10 years.

“Ashley had an almost impossible job,” said Filippo Maria Alloatti, head of financials credit at Federated Hermes Ltd. in London. “With hindsight, Nomura’s ambition after the global financial crisis were too ambitious.”

Still, there were warning signs about risk controls, years before Archegos. Nomura lost more than $40 million in 2015 -- then its biggest-ever individual trading loss -- on trades with an obscure company called Invexstar Capital Management Ltd., whose owner’s two previous firms had also imploded.

Two years later, a Nomura trader in Singapore pushed through hundreds of millions of dollars of currency transactions for hedge fund Glen Point Capital LLP that are now at the center of a US criminal case against its co-founder Neil Phillips, Bloomberg reported earlier this month.

Even as it sought to build revenue elsewhere, Nomura was caught out by the collapse of Archegos, with the brokerage booking the second-highest losses after Credit Suisse Group AG. Many senior executives left in the wake of the debacle, but Ashley stayed on, helping to lead a lengthy review of the wholesale division’s internal controls.

The takeaway from Ashley and Willcox’s new roles “is that digital business and internationalizing the firm remain the two areas where Nomura needs to be successful to improve profitability and survive as an independent entity,” said Morningstar’s Makdad.

New Rules

Willcox will also have to contend with new regulation introduced by the Basel Committee on Banking Supervision that are set to take effect in 2025. This could impose billions of dollars of new capital requirements on trading desks. 

The rules may spur Nomura to ditch “asset-heavy” trading businesses and embrace “asset-light” ones instead such as wealth management and advising clients on deals, according to CreditSights’ Shenoi.

“That’s the theory,” he said. “The journey will be difficult in practice as new revenue streams may not come on sufficiently while old revenue streams are given up. That’s the main challenge facing Christopher Willcox.”

(Adds share price in seventh paragraph.)

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