Japan’s SMFG to make Frankfurt EU base

TOKYO: Japanese lender Sumitomo Mitsui Financial Group Inc will make Frankfurt its new European headquarters as it prepares for Britain´s exit from the European Union in 2019, the Nikkei business daily reported on Saturday.

SMFG, Japan´s third largest lender, will move to Frankfurt as its current EU base in London will likely become unable to lead the bank´s business in the bloc after Brexit, the Nikkei said, without citing the source of its information.

Financial services firms need “passporting” rights through a regulated subsidiary in an EU country to sell products across the bloc.

A British exit from the EU single market almost certainly means UK-based banks will lose those rights.

The move would see SMFG follow Nomura Holdings Inc and Daiwa Securities Group Inc, respectively Japan´s No. 1 and No. 2 brokerage groups, in setting up bases in the German city ahead of Brexit.

Several other banks are also preparing to shift their EU base to Frankfurt from London.

SMFG´s banking and investment banking arms, Sumitomo Mitsui Banking Corp and SMBC Nikko respectively, will both set up subsidiaries in Frankfurt, the report said, adding that some employees would move to the German city from London.

It did not say how many employees would be affected, or detail the date of any move.

SMFG´s London office employs around 1,000 people. SMFG could not be reached for comment outside business hours.

Frankfurt, the financial capital of Europe´s biggest economy, has been promoting itself as a stable city for banks looking to move because of Brexit, with German politicians discreetly welcoming those looking to relocate.

SMFG´s Japanese rivals, Mitsubishi UFJ Financial Group and Mizuho Financial Group, have EU passporting rights through their banking units in Amsterdam.