Citigroup is betting that Japan¡¯s bond market revival will gather steam, drawing talent back and rewarding the Wall Street lender¡¯s push to expand its debt business after the central bank scrapped negative interest rates.

¡°It¡¯s going to be a very exciting market,¡± said Kazuhiro Nakajima, managing director at the U.S. bank¡¯s local securities arm. ¡°That should attract more talent,¡± he said, without giving hiring plans for the bank.

Resurgent activity in Japan¡¯s $7.3 trillion government bond market has set off a competition among banks to poach traders from rivals, in a break from years of low volatility and staff attrition. Top-performing debt and rates traders are pocketing higher bonuses, unlike bankers doing other jobs in Japan.

¡°We have much more young talent joining the rate sales team nowadays,¡± Nakajima said in an interview. ¡°It was difficult before to place new graduates into the rates flow business because the market had pretty much died. It didn¡¯t move at all.¡±

The Bank of Japan ended the world¡¯s last remaining negative-rate policy last month, along with its tight control over bond yields, opening the door for more volatility in a welcome development for brokers.

Citigroup itself has ¡°kept a lot of experienced veterans¡± for Japanese bond and rates business even when trading was subdued, with roughly half of them having firsthand experience of the BOJ¡¯s previous rate hikes in 2006-07, Nakajima said. ¡°Our rates business is competitive on the street.¡±

The U.S. bank set out this year to extend its yen rates business to dozens of Japanese regional lenders, and the result has been surprisingly positive, he said.

¡°Normalization has started, so we foresee a lot of activity going forward,¡± said Nakajima, who is deputy head of financial institutions sales and solutions. Citigroup¡¯s transactions with those local firms grew three times faster than expected, he said, without elaborating. The business involves Japanese government bonds and yen rate swaps.

The outlook for the equities business has also improved as a recent dramatic recovery in Japan¡¯s stock market draws more global attention to the nation¡¯s companies, according to Nakajima, who is also co-head of equity markets.

¡°Our analysts are receiving a great number of calls and Zoom requests,¡± he said. Japanese firms are undertaking governance reforms while global investment money is flowing out of China into the local market, he said.

¡°It was very difficult to secure time to pitch to overseas investors when China was hot,¡± he said. ¡°Everything is coming at the right time.¡±