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Business

Japanese bank Sumitomo Mitsui confirms Frankfurt as European base after Brexit

Many leading financial institutions are threatening to leave London following Britain's exit from the European Union. Japan's Sumitomo Mitsui will shift its focus to Frankfurt to maintain clients in EU member states.

Japan's third-largest bank Sumitomo Mitsui (SMFG) will establish its European headquarters in Frankfurt with the aim of serving European Union-based customers after the Britain leaves the bloc, the company confirmed on Monday.

First reported by Japanese business magazine "Nikkei," the relocation will impact up to 1,000 employees at its current regional base in London.

The news comes amid attempts by former minister for the City of London, Mark Hoban, to protect the UK capital's dominance. On Wednesday, Hoban will lead a delegation to meet with EU officials to discuss the future of London's financial district.

London currently ranks ahead of New York, Hong Kong, Singapore and Tokyo as the number one financial center in the world, according to the Global Financial Centers Index.

But the British capital's influence could be on the wane as City banks threaten to relocate up to 9,000 jobs to Frankfurt or to Ireland's capital, Dublin.

UK | Blick auf das Geböude der Europäischen Bankenaufsichtsbehörde (picture-alliance/empics/M. Crossik)

Canary Wharf in central London which houses several financial institutions that could relocate to Frankfurt

The Brexit exodus begins

US bank Morgan Stanley is one of those leading banks set to move to EU cities, as Frankfurt vies with Amsterdam, Dublin and Luxembourg to secure the extra business.

SMFG is the latest Japanese institution to set its sights on it considered to be firm EU territory. Nomura -one of Japan's leading investment banks - and security firm Daiwa Securities have already opted to move some of their EU business from London to Frankfurt.

Two of SMFG's Japanese competitors, Mitsubishi and Mizuho, say they aren't dependent on a move to Frankfurt as they operate subsidaries in Amsterdam.

"Japanese banks were warned early of the consequences of Brexit and are now among the first to move," said Hubertus Väth, Managing Director of the Finanzplatz-Initiative in Frankfurt.

The Association of Foreign Banks expects more than 3,000 new jobs to be created in Frankfurt after Britain leaves the EU.

rd/mm (dpa, Reuters)