Daiwa May Form EU Business as Japanese Banks Weigh Brexit Impact

  • Mitsubishi UFJ Financial expresses commitment to U.K. market
  • Global bankers had warned they may move jobs from London

Japanese banks are weighing the impact of the Brexit vote, with Daiwa Securities Group Inc. saying it may have to form new operations in Europe, Nomura Holdings Inc. setting up a team to examine the move and Mitsubishi UFJ Financial Group Inc. expressing its commitment to the U.K.

Daiwa, which has about 400 employees in London, will take time to consider its response to the U.K.’s “very regrettable” vote to leave the European Union, Chief Executive Officer Takashi Hibino told reporters at the brokerage’s Tokyo headquarters on Friday. Hibino said the firm may establish an operation in an EU country as a result.

MUFG, Japan’s biggest bank, said it has no intention to withdraw from the U.K., which will “continue to be an important market.” A possible British economic slowdown may affect business, along with the potential for the country to lose so-called passporting rights which make it easier for financial firms to conduct European operations out of the nation, MUFG said in an e-mailed statement.

Shares of the Tokyo-based firms tumbled Friday amid a global market rout, with Nomura losing 11 percent as the Nikkei 225 Stock Average plunged the most since the aftermath of the nation’s March 2011 earthquake and tsunami. Top global banking executives from JPMorgan Chase & Co.’s Jamie Dimon to HSBC Holdings Plc’s Stuart Gulliver had warned that a Brexit could cause them to move thousands of jobs from the U.K. 

‘Profound Impact’

Nomura is closely watching the situation and will “take the necessary measures,” it said by e-mail. Japan’s biggest brokerage recently fired hundreds of London workers as part of a restructuring of its European equities business.

Daiwa warned in a recent memo to London staff that a vote to leave the EU would have a “profound impact” on its European operations, which are based in the city. To ensure continued access to the region’s markets after an exit from the bloc, Daiwa would have to set up a business in the EU that replicates or replaces some functions in London, the firm said in the document.

Sumitomo Mitsui Banking Corp., a unit of Japan’s second-biggest lender by market value, said it doesn’t expect to be significantly affected by Brexit and the long-term impact depends on discussions between the U.K. and the EU. Mizuho Financial Group Inc. said it will study the situation and respond appropriately.

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