Nomura Said to Choose Frankfurt as EU Base Following Brexit (3)

(Bloomberg) -- Japan’s biggest securities firms have zeroed in on Frankfurt as their base in a post-Brexit European Union.

Nomura Holdings Inc. picked the German city as the headquarters for its EU operations after the U.K. leaves the bloc, according to people with knowledge of the matter. Smaller rival Daiwa Securities Group Inc. said it will establish a subsidiary there to continue to service clients in the EU after Brexit.

Nomura plans to transfer fewer than 100 people to Frankfurt from London after seeking regulatory approval and office space, one of the people said, asking not to be identified because the matter is confidential. The company, which employs more than 3,000 people in Europe -- mainly in the British capital, starts preparations this month, the person said. Daiwa will apply for a license to the German regulator, the Tokyo-based company said in a statement on Thursday.

Frankfurt, home to the European Central Bank, has emerged as one of the favored options for global banks seeking to relocate jobs from London. Goldman Sachs Group Inc. and Morgan Stanley are scouting for office space in the city, which could serve as their new trading hub inside the EU, people with knowledge of the matter said earlier this month.

Read more: A Q&A explainer on Brexit’s exodus of banks from London

The moves by Nomura and Daiwa come despite Prime Minister Theresa May’s loss of a majority in elections this month, which made it more likely the U.K. will seek a softer Brexit deal that would reduce the impact on its financial-services industry. Formal negotiations between U.K. and EU officials began this week.

Nomura, which as of March had 3,026 employees in Europe, mostly in London, had been considering cities including Munich, Luxembourg and Paris to house its EU operations. Kenji Yamashita, a spokesman for Nomura in Tokyo, declined to comment on the decision to choose Frankfurt. Daiwa had been weighing a move to Dublin.

Europe Rebound

Tokyo-based Nomura has enjoyed an earnings revival in Europe recently following a round of cost cuts. Last fiscal year, it posted its first annual overseas profit in seven years after eliminating about 900 jobs, mainly in Europe and the U.S.

Frankfurt isn’t the only financial hub in the sights of Japanese financial firms. Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc., the nation’s largest lenders by assets, have been building their presence in Amsterdam, where they hold a banking license that gives them access to the EU.

The U.K.’s Chancellor of the Exchequer Philip Hammond and Bank of England Governor Mark Carney joined forces this week to defend the financial-services industry as the government seeks to shift its Brexit focus away from controlling migration to safeguarding jobs. Hammond said the “fragmentation” of services would increase prices of financial products, while Carney called for a new system of cooperation between Britain and the EU over derivatives clearinghouses.

(Updates with employees in Europe in third paragraph.)

To contact the reporter on this story: Takahiko Hyuga in Tokyo at thyuga@bloomberg.net.

To contact the editors responsible for this story: Marcus Wright at mwright115@bloomberg.net, Russell Ward

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