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Warnings of Brexit Moves from London Given by Japanese Banks

Warnings of Brexit Moves from London Given by Japanese Banks
Some functions of Japanese financial institutions would be moved from London within six months if they are not given clarity on the UK's future relationship with the EU, they have warned.
The media quoted two people with knowledge of the issues saying that their position at a “frank” meeting on December 1 between the UK City minister Simon Kirty and Mark Garnier, international trade minister with responsibility for financial services, and executives from Japanese groups including investment banks Nomura and Daiwa Capital Markets were laid out on December 1.
It “would be better for our EU-based customers to have an alternative hub”, one senior executive of a big Japanese bank reportedly said this week regarding to the uncertainty surrounding London’s future as a gateway to Europe.
On a trip to Tokyo on Thursday by Philip Hammond, British chancellor of the exchequer, concerns within the UK government over a possible exodus of Japanese banks were highlighted. Senior managers of Japanese financial groups repeated fears about market access, euro clearing and access to European labour markets in a meeting with him as this issue was high on his agenda during the short visit and the meeting.
"It's fairly binary for them: they either have access to their markets or they don't have access," Mr Hammond admitted to reporters after the meeting. "If they have full access to the markets from London they can continue operating as now. If they don't, they will have to restructure the way their operations address the European market."
With the four biggest banks together employing more than 5,000, Japanese financial institutions are major employers in the UK, while not as big as their American rivals.
"Passporting", the system that allows them to use their London bases to do business right across the 31 countries in the European Economic Area, is the issue that the financial services groups are most concerned about.
Japan's largest banking group, Mitsubishi UFJ, has upgraded the status of its operation in Amsterdam and moved staff from London for that expansion since Britain voted to leave the EU in June
With its own passport, its rival, Mizuho, already has a continental European office. While no moves have yet been made, "intensive" efforts to lay the groundwork for enlarged continental European operations should a rapid shift become necessary is being are being conducted by other Japanese banks and brokerage houses.
A timeframe that several banks have been using to decide whether the UK has made progress in negotiations with Brussels was the six-month deadline described by Japanese banks to UK ministers would time any moves to June 2017 — about a year after the UK referendum.
They would be forced to begin moving some functions out of London by mid-2017, said the financial services groups at the December 1 meeting, of they are not given a guarantee that passporting would be retained after Brexit.
The banks' objective was to explain their likely actions to the government and the companies knew there was only a slim chance of the UK being able to guarantee passporting.
The media quoted a bank official as saying that it was not confrontational and did not feature threats and that the meeting as a "frank exchange of realism". Representatives from the Bank of Japan and Japan's finance ministry were also present in the meeting.

Christopher J. Mitchell

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