Things are getting tense at Japanese brokerage Nomura Holdings <8604.T>.

As Japan's annual banker bonus season nears, there are expectations that many of the 8,000 or so Lehman staff inherited in a bold acquisition of the failed Wall Street broker late last year may walk or be axed.

Concerns over pay disparity and job security are rife and have soured the mood at Nomura, which bought Lehman's Asian, European and Middle Eastern divisions in a bid to raise its global profile and get instant access to places like China, Dubai and London.

While some legacy Lehman bankers, used to taking risks and making snap decisions, are frustrated by a traditional Japanese corporate culture of bureaucracy, hierarchy and deliberate decision making, sources at the bank say Nomura veterans resent how Lehman staffers are paid and how some replaced Nomura executives.

The mood within the office is very bad, said one London-based Nomura employee, a sentiment shared in Asia, according to several bank staffers contacted by Reuters, none of whom wanted to be named due to the sensitivity of the matter.

One executive said frustrations in the Tokyo headquarters stem in part from a job overlap there, even though the point of the deal was to tap Lehman's reach in places like Hong Kong and London.

Nomura is not alone in weathering a brutal climate and tough bonus season, but it is in a unique situation.

Not only is it grappling with integration amid market turmoil, but to retain many of the Lehman bankers, Nomura offered a lucrative incentive plan just as the financial industry hit its worst downturn in recent memory.

The plan: a guarantee they would earn their 2007 bull market salary and bonus. That would add up in many cases to more than $3 million apiece, depending on which department they worked in, sources said.

Some guarantees were offered for 2-3 years, they added.

Recipients will get 70 percent of the annual guarantee from next week, the end of Nomura's financial year, with the rest in October. Yet sources say a flow of frustrated Lehman bankers will leave soon afterwards -- if they aren't made redundant before.

Some Lehman veterans have already headed for the exit.

Some non-Lehman staff will be paid well, too, but hope of a good bonus for the rank and file is fading fast.

While the guarantees helped keep Lehman bankers, the cost has taken its toll on Nomura -- on the bottom-line and on morale.

The guarantees were a big concern, and still are a big concern. We'll get stock, but if we're not going to get anything else, and the Lehman guys get theirs, it's just very upsetting, said a legacy Hong Kong Nomura banker.

Nomura declined to comment for this article.


This isn't to say that Nomura hasn't gained from the deal.

The Japanese firm is now in the top slots of several banking league table categories and, thanks to its Lehman network, it recently arranged a convertible bond issued by South Korea's top mobile operator and is advising a state-backed Chinese company on that country's biggest overseas acquisition.

One new hire in Hong Kong said Nomura offered more freedom and support than the big U.S. bank he came from. Nomura is also hiring dozens of people in the United States.

Despite the success in various segments, Nomura's recent financial figures, however, were dismal.

The issue is how quickly can they lower the recurring cost base, said one Tokyo-based analyst, who covers Nomura. He was not authorized to speak on the record to the media.

The departure of ex-Lehman guys will lead to a reduction of that cost base, he said. Even after a 10 percent reduction, they have to reduce their costs further.

The analyst estimated Nomura's employee count at around 26,000 -- 18,000 Nomura staff and 8,000 it inherited from Lehman. He thinks Nomura should quickly whittle that down to 22,000.

Most acquisitions have integration pains. Look at JPMorgan-Bear Stearns and Bank of America-Merrill Lynch.

What makes Nomura's case different is the ambition behind it.

The deal was Nomura's big chance to become a global financial titan rather than a Japan-focused broker. It was the folding of a New York institution into a Japanese firm and a gamble led by Nomura's Takumi Shibata. But the stricken global economy has made a smooth start all the more difficult.

At the time of the rescue, analysts pointed to the financial challenges ahead, but also noted the starkly different cultures involved in bringing together Nomura and Lehman.

It's a clash of cultures, said the Hong Kong Nomura source. There's always the question of whether this was a big sell job.

Some insiders say that, given Nomura rescued Lehman, Nomura should have the final say on big decisions. But some legacy Lehman bankers point out that most of Nomura's recent expansion happened because of Lehman's existing footprint.

Legacy Lehman guys are having a hard time breaking through the Nomura ceiling, said an ex-Lehman veteran. Lehman guys may be in high positions, but they answer to Nomura executives.

On December 1, Nomura announced its new 14-seat management structure for its global wholesale business. Only one Lehman member, Jasjit Bhattal, was on it.

We need to cut staff more than we'd originally planned, said the Nomura executive.

Whether those cuts center more on ex-Lehman or not, sources say, will be a delicate matter.

(Additional reporting by Emi Emoto, Rafael Nam and Clare Jim)

(Editing by Ian Geoghegan)