I wondered when Nomura was going to start letting the heads roll from the Lehman purchase.

Via Bloomberg.

When I was in Japan, it was one of the more unusual jobs I ever had: explaining to the back office of Lehman Japan why they were accruing millions of dollars (in yen) of interest expense. When I went in, they thought they had a computer problem. It turned out it was the yen carry trade. The Japan unit was incurring interest charges for borrowing yen in Tokyo, but the unit on the other end of the carry was not recording the fact that its borrowing from the Japan unit was not at 0%. In 2007, this was a $25 million problem.

Around the time that Some months before Lehman went bust in September 2008, Warren Buffett mentioned about a “$100 million” problem in Japan as one of the reasons he hadn’t wanted to go in with an investment. Turned out to be a good move. A totally different accounting maneuver called “Repo 105” had rendered Lehman Brothers insolvent several weeks before it actually went bankrupt.

Nomura bought the Asian and American units from the trustee in bankruptcy. Nomura was looking to expand their capabilities outside of Japan; but in the subsequent recession, I don’t think that strategy was going to pay off. Now, four years later, comes the restructuring. (I am sure there was restructuring in the initial purchase, but you never heard anything much after that.)

With Goldman Sachs, even, cutting heads in Tokyo earlier this year, I wonder how much remains of “old” Lehman within Roppongi Hills. I bet you very little of the foreign staff remains.

[Update 9/13/12: Lehman’s overture to Buffett was in March 2008.]