Daiwa Sees ‘Profound Impact’ of Brexit on Its London Operationsby and
Bank says it would need to set up new entity in another nation
Japanese brokerage is latest firm to warn employees of effect
Daiwa Securities Group Inc., a Japanese brokerage with operations in the U.K., would have to set up a business in the European Union that replicates or replaces some functions in London if Britain votes to leave the bloc, according to a memo to employees.
“Brexit would have the potential to have a profound impact” on Daiwa Capital Markets Europe Ltd. and its London operations, the unit wrote in the document seen by Bloomberg. Hiroki Aoyama, a spokesman for the parent company in Tokyo, declined to comment.
Financial firms including JPMorgan Chase & Co., HSBC Holdings Plc and Deutsche Bank AG are warning of the need to move activities from London if British people choose to leave the EU in the June 23 referendum. Citigroup Inc. will “rebalance” its European operations in the event of a so-called Brexit, a company memo showed this week.
Under European banking law, financial firms not based in the EU need an authorized presence to do business there. If the U.K. left the union, Daiwa Capital Markets Europe would lose the right to operate freely in the region because its branch in Geneva is outside the EU, it said in the memo.
“The only sure-fire way to ensure continued unfettered access to EU markets post-Brexit will be for DCME to establish a separately capitalised and regulated entity in a remaining EU country,” the firm wrote. The entity would have to be “replicating or replacing at least some of the functions in London.”