Guy Hands fired the first person who walked into his glass office to introduce themselves after joining Nomura.

The hard-headed dealmaker only wanted the toughest recruits on his team when he arrived at the Japanese investment bank in the early 1990s, on a mission to purchase underperforming business and sell them for profit.

Hands is said to have cleared out anyone who could not meet his standards and replaced them with the most formidable analysts and maths post-graduates he could find, forming Nomura’s Principal Finance Group. His analysts researched rigorously to get better data than competitors on undervalued assets. They once called every train manufacturer globally to work out the real lifetime use of trains being sold off by British Rail, securing a deal that ultimately netted Nomura £400m. 

Employees would later say working for the billionaire banker was like living through the “last days of the Roman Empire”. The now 62-year-old later went on to become one of Britain’s richest men.

This was the man the Government was up against when it negotiated a sale of thousands of military homes to Hands while he was at Nomura, in a deal that ultimately cost the taxpayer billions. 

A senior official told then prime minister John Major in a letter that negotiations were “intensive, but fairly conducted”. 

Years later, however, critics have concluded the outcome was a “rotten” deal for taxpayers. Hands is now on a collision course with the Government over the deal struck during Major’s premiership.

Nomura fought off Warren Buffet and the Lehman Brothers to secure the Annington Homes portfolio from the Ministry of Defence for £1.7bn in 1996. As the biggest residential property owner in England and Wales, it spans 57,400 houses for military personnel across more than 450 sites. Following the deal, the Government then rented back the homes on a 200-year lease and agreed to pay costs for upkeep.

Decades later, the MoD is reassessing. The National Audit Office concluded the deal has cost the taxpayer up to £4.2bn, and complained the MoD was too cautious with its assumptions for house prices and missed out on vast capital growth in the portfolio.

Now, the MoD has hashed out an ambitious strategy to claim those homes back, revealing last month it would use its leasehold enfranchisement rights – where the Government purchases the freeholds at a price agreed by a court.

But Hands’ private equity fund Terra Firma, which bought the portfolio from Nomura in 2012, has different plans. It wants to sell the estate for £8bn and is threatening to sue the MoD to block the reprivatisation.

Hands’ fund has warned a legal battle could take up to five years and would waste even more taxpayer money, claiming the MoD’s scheme would block the courts with thousands of individual disputes over the value of each home.

The Government, however, is convinced a judicial review would progress quickly. It plans to pursue a bulk enfranchisement of the homes if they can demonstrate the process works in a sample of test cases.

As a solution, London-based Terra Firma, founded by Hands in 2002, has now offered to pay £105m for the upkeep of the homes – if the Government agrees to drop its reprivatisation.