Dutch courage: Japanese banks move into Amsterdam

Netherlands capital rivals Frankfurt, Paris and Dublin as a post-Brexit base for banks

Dutch election campaign posters  in front of the Royal Concertgebouw on the Museum Square in Amsterdam.  Photograph: Michael Kooren/Reuters

Dutch election campaign posters in front of the Royal Concertgebouw on the Museum Square in Amsterdam. Photograph: Michael Kooren/Reuters

 

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 (MUFG) and Mizuho Financial Group 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 UK’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.

‘Quality of living’

“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 started reporting to Amsterdam last year and it plans to do the same for eight more including Germany, Spain and Portugal in the year starting April 1st, 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 January 1st, 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.

Potential locations

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.

“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 early as this month.

Two years of separation talks between the UK and the EU are set to begin 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.

MUFG, Mizuho and rival Sumitomo Mitsui Financial Group 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.

Banking licence

Sumitomo Mitsui, which is yet to obtain a European banking licence outside of the UK, 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.

Japan’s biggest securities firms are also making plans for Brexit. Nomura Holdings Inc has brokerage licences 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 is considering Frankfurt and Dublin to host European operations it may move out of London, CEO Takashi Hibino said in January.

Final polls

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

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 Group and ABN Amro Group 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.

– (Bloomberg)