Photographer: Jasper Juinen/Bloomberg

Konnichiwa Amsterdam: Japan Banks Eye Post-Brexit Home

  • MUFG and Mizuho have bolstered operations in the Dutch city
  • Cheaper rents, moderate taxes and English proficiency appeal

As Frankfurt, Paris and Dublin vie for financial jobs that may move from London after Brexit, two of Japan’s biggest banks have been quietly building their presence elsewhere: Amsterdam.

Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc. are bolstering their units in the Dutch city, where they both hold a banking license that enables them to serve clients throughout the European Union. They still need to choose a location for conducting securities business in the region should the U.K.’s exit make London a more difficult place to perform certain services for European customers, such as underwriting and derivatives.

Like their global peers, Japanese banks and brokerages employ thousands in London and are closely watching developments over the terms of Brexit to determine whether to move employees and where to station them. While the race among Europe’s financial capitals to lure jobs remains open, Amsterdam is appealing because of a relatively cheap supply of offices, moderate taxes and fluency in English -- even if an election on Wednesday could cloud the nation’s future.

Read more on the Dutch election: Can a populist become prime minister?

“There’s enough space for the foreseeable future and the language and quality of living are probably supportive,” said Robin Van Den Broek, a bank analyst at Mediobanca SpA in London. Even if the anti-European party led by Geert Wilders wins seats, it won’t find coalition partners willing to form a government, he said.

MUFG, Japan’s biggest bank, sought to build its Amsterdam offices even before Brexit became a reality because it wanted the city to serve as a hub for operations on the European continent. Three of the lender’s European offices already report to Amsterdam and it plans to add eight more including Germany, Spain and Portugal from the year starting April 1, Naoki Mizoguchi, Tokyo-based chief manager of the global planning division, said in an interview.

Mizuho changed the name of its Netherlands unit to Mizuho Bank Europe on Jan. 1, reflecting its role as a subsidiary overseeing a number of countries in the region. The Amsterdam-based entity manages European operations including Belgium, Austria and Spain.

Japan’s second-largest lender by assets is considering Amsterdam and Dublin among potential locations to base its brokerage unit if it’s impacted by a “heavy Brexit,” Mizuho President Yasuhiro Sato said in an interview in January.

Read more: Whether Brexit will trigger an exodus of banks from London

“We’ll have to build the structures that enable us to pursue our strategy,” whether it be in the Netherlands, Ireland, Germany or France, said Kenjiro Oishi, a senior manager in the global corporate coordination department. “It’s natural for these countries to be on the list,” he said, adding that Mizuho will decide on a general direction as soon as this month.

Two years of separation talks between the U.K. and the EU are set to begin as soon as this month after Prime Minister Theresa May this week secured parliament’s approval to invoke Article 50 of the Lisbon Treaty. Terms of the divorce will dictate how many banking jobs move, with forecasts ranging wildly from more than 200,000 to as few as 4,000.

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MUFG, Mizuho and rival Sumitomo Mitsui Financial Group Inc. employ about 6,800 people in Europe. About 4,500 of them are stationed in London, which is their base for Europe, Africa and the Middle East.

Sumitomo Mitsui, which is yet to obtain a European banking license outside of the U.K., is considering “all possibilities,” including establishing a unit in Europe, Takeshi Kunibe, chief executive officer of the lending unit, said in January. The bank is committed to business in Europe, where it’s been making acquisitions to boost asset returns, including the purchase of a Dublin-based aircraft-leasing company, said Kenichiro Mori, head of strategic planning.

Nomura, Daiwa

Japan’s biggest securities firms are also making plans for Brexit. Nomura Holdings Inc. has brokerage licenses in countries including France and the Netherlands, and relies on so-called passporting rights for access to clients in locations such as Germany and Spain. Daiwa Securities Group Inc. is considering Frankfurt and Dublin to host European operations it may move out of London, CEO Takashi Hibino said in January.

For now, all eyes are on the Dutch election later Wednesday, with final polls showing Wilders’ populist Freedom Party slipping against Prime Minister Mark Rutte’s Liberals.

QuickTake Banks’ Brexit Future Hinges on Passporting Rights

With its scenic canals, bicycle-friendly streets and well-connected international airport, Amsterdam is an attractive place to live regardless of politics. Banks including ING Groep NV and ABN Amro Group NV are based in the city, along with the Euronext NV exchange and an increasing number of technology startups.

“Amsterdam has a lot to offer compared to others,” said Van Den Broek.

— With assistance by Takahiko Hyuga

(Company corrects timing of reporting to Amsterdam hub in fifth paragraph of story published March 15.)
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