Nomura choose Frankfurt for new headquarters post-Brexit

7 years ago - Published in Finance, Fundamental Analysis

Nomura picked Frankfurt as the headquarters for its European Union operations after the UK leaves the bloc, Bloomberg reported.  

Japan’s biggest brokerage will start preparations this month to form a base in the German financial centre, one of the people said, asking not to be identified as the matter is confidential. The decision will necessitate regulatory approval along with securing the requisite office space before transferring fewer than 100 employees from London to the city, according to the person.

Nomura’s decision to move to Frankfurt, home to the European Central Bank, perhaps makes the decision easier for other lenders, many of which could be primed to act given the logistical challenges associated with Frankfurt. One of the biggest drawbacks to the city in past analyses has been a dearth of office space, which is unlikely to accommodate thousands of employees entering the labor pool.

Kenji Yamashita, a spokesman for Nomura in Tokyo, declined to comment. The Tokyo-based securities firm 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.

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. 
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."

Goldman Sachs, JP Morgan Chase and Morgan Stanley are among other global banks reportedly also seeking to relocate European offices away from London as a result of the Brexit vote last year.