Global banks operating in the UK have finally started publicizing their plans for life after Brexit, relocating substantial portions of their operations, and in some cases their headquarters, out of London. Nomura has become the latest bank to make a decision, opting to undergo a move to Frankfurt with London’s star as Europe’s financial capital gradually dimming.
Banks have been mulling this decision for nearly a year, including lenders operating in or based out of London. Pressure had been ramped up by Brexit talks, a fact only exacerbated by Theresa May’s terse rhetoric that would effectively eliminate any more passporting privileges for lenders. Consequently, many banks have been eyeing one of several cities within the European Union, with Dublin, Frankfurt, and Amsterdam emerging as the three most likely locales.
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Nomura’s decision to move to Frankfurt perhaps makes the decision easier for other lenders, many of which could be primed to act given the logistical challenges associated with Frankfurt. One of the biggest drawbacks to the city in past analyses has been a dearth of office space, which is unlikely to accommodate thousands of employees entering the labor pool.
This could be one reason why Japan’s largest brokerage chose to act ahead of other rival banks, as office space had already been drying up in recent months. Deutsche Bank had already announced that it would be relocating 4,000 jobs out of London to Frankfurt back in April, which ultimately could have been the final impetus needed that factored into Nomura’s decision-making. Space constraints aside, Frankfurt does possess a talented pool of workers in its own right, as the city also benefits from its geographical position and existing economic strength.
While constraints surrounding the availability of office space likely loomed as a driving factor, the timing of the decision is ironic as it comes immediately following Theresa May’s stunning electoral setback earlier this month. May had been an advocate for a harder line Brexit, with the fallout now opening the door for a softer deal that could mitigate the impact on the financial services industry – its unclear how passporting rights may be affected moving forward though evidently Nomura was not willing to wait any longer for a contingency plan.
Nomura will be finalizing its plans as early as this month, with Frankfurt becoming its de-facto base of operations in Europe moving forward. The decision will necessitate regulatory approval along with securing the requisite office space – this will subsequently lead to the transferring of approximately a hundred employees from London to Frankfurt as well in a first wave of relocations.