Executives from Japanese groups including investment banks Nomura and Daiwa Capital Markets laid out their position at a “frank” meeting on December 1 with the UK City minister Simon Kirby and Mark Garnier, international trade minister with responsibility for financial services, according to two people with knowledge of the meeting.
“I think you are going to get a steady drumbeat of these kind of announcements (about moving) over the next few months, as everyone in the City starts talking to regulators, applying for licences, setting up subsidiaries and even taking options on buildings in the EU,” said Sir Gerry Grimstone, chairman of Standard Life and deputy chairman of Barclays.
A senior executive at a large US bank said the Japanese are “not unique in wanting clarity” and that most firms are planning for the “worst case outcome . . . absent a clear view of the end-game”. The worst case outcome for banks would involve the UK losing access to Europe’s single market, so they and other financial services firms could no longer ‘passport’ from London to the European Economic Area’s 31 countries.[...]
The Japanese institutions said they needed imminent clarity on “passporting” at the December 1 meeting or they would be forced to begin moving some functions out of London by mid-2017. “It’s fairly binary for them: they either have access to their markets or they don’t have access,” Philip Hammond, UK Chancellor of the Exchequer, admitted to reporters after a follow up meeting with the Japanese institutions in Tokyo on Thursday.
“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.” [...]
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