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LONDON – Japanese bank Nomura has confirmed reports it is applying for a licence to operate in Frankfurt as its European Union base after Brexit.
Currently, its official European HQ is in London. The move will affect very few employees – the bank will transfer fewer than 100 staff from London, where it currently employs between 2,500 and 2,800 people.
However, the decision carries a heavy symbolic weight for The City, which has long prided itself on being the centre of European finance.
The bank said in a statement: “Nomura has been actively planning since before the referendum took place to ensure that the company meets the needs of its global and regional clients, no matter what the final terms of the UK’s exit from the EU are.
“The aim remains to minimise disruption for clients and employees.”
“Nomura will be fully prepared to provide a continued, uninterrupted service to its clients by the time the UK exits the EU in 2019.”
Nomura joins Morgan Stanley and Goldman Sachs in announcing this month that it will shift part of its London operations to Frankfurt.
Goldman Sachs is planning to shift around 200 staff from London to Frankfurt, where it already employs around 200 people, the bank’s regional head Richard Gnodde has confirmed.
Morgan Stanley, which employs 5,000 staff in London, reportedly intends to move some of them out of London, shifting its broker-dealer business to Frankfurt and its asset management operations to Dublin.
London bankers are expecting a steady drip of major banks to announce over the next two years that their official European centres will no longer be in Britain.
Bloomberg News reported last week that Nomura had picked Frankfurt as its European Union hub after the UK leaves the 28-nation trading bloc.
The lender is in the process of finding office space and regulatory approval for a new base of operations, Bloomberg said.
With the clock ticking down to March 2019, banks are not waiting to see how the UK’s talks with the European Union pan out.
The UK has been thrown into political chaos after this month’s general election returned a hung parliament, weakening rather than strengthening Prime Minister Theresa May’s credibility in the negotiations.
US investment bank Citi is preparing for a “hard Brexit” and is in the final stages of deciding where to move operations to maintain links to clients, EMEA corporate and investment banking chief, Manolo Falco, told Business Insider earlier this month.
Banks and European regulators need at least a year, if not longer, to set up fully functioning branches and subsidiaries in Europe to maintain activities. This means that if talks stumble, or the likelihood of the UK leaving the EU without a transition deal increases, banks may be forced to move quickly on plans to boost EU offices.
Frankfurt could prove to be a popular destination for its proximity to the European Central Bank. Last month, Sabine Lautenschlager, vice-chair of the Frankfurt-based SSM, a unit of the ECB, said applications for European licences will be scrutinised closely.
“It is the ECB that grants licences in the euro area. And to be clear: we will only grant licences to well-capitalised and well-managed banks,” she said.
“We will not accept empty shell companies. Any new entity must have adequate local risk management, sufficient local staff and operational independence.”