As Brexit approaches, nervous Japanese banks and financial firms are busy cementing footholds on mainland Europe. Will other Asian lenders follow.
In the run-up to Britain’s exit from the European Union, the major Japanese financial institutions are reviewing their strategies on the locations of business footholds in Europe.
Paris, Frankfurt and Dublin have so far been on the radar for most institutions unsure of how Brexit talks will conclude.
Japan's «JIJI Press» (behind paywall) claims that Sumitomo Mitsui Financial Group (SMFG) and Nomura Holdings have started preparations to set up subsidiaries in Frankfurt, apart from their existing British units, which have until now served as their core European bases.
One For All
They hope to ensure that their operations in the E.U. will be sustained even after Britain leaves the bloc, officials said.
The European Union has the so-called single passport system for financial services, under which a financial institution is allowed to operate in all E.U. states if it obtains a business license in one member nation.
Significant Movements
Japanese financial institutions including Sumitomo Mitsui Banking Corp., the core banking arm of SMFG, currently use their licenses obtained in Britain for their operations in Europe, so they are concerned that they may no longer be authorized to do business in the E.U. after Brexit.
Nobuyuki Hirano, chairman of the Japanese Bankers Association, or Zenginkyo, said «The possible effects on Japanese financial institutions are very significant»
German Gain
SMFG plans to set up banking and securities subsidiaries in Frankfurt by March 2019. Nomura and Daiwa Securities Group are also speeding up work to create subsidiaries in the German city.
While the selection of places for their business footholds in Europe after Brexit differs from company to company, major Japanese financial institutions mostly plan to keep the control functions overseeing their broader European operations in the United Kingdom.
