Two Japanese Banks Bail on London Ahead of Brexit

The run on the City is picking up steam.

Two Japanese banks, Nomura and Daiwa, are reportedly relocating their headquarters to Frankfurt, since the U.K. is currently in divorce talks with the European Union.

It follows a steady drumbeat of similar announcements from other big investment banks operating in the world’s financial capital, not to mention being exactly the kind of thing many in the Remain camp warned would happen if Britain opted for a Brexit. It all adds up to terrible news for a country where banking and finance make up 8 percent of GDP.

“This arrangement will ensure that Daiwa can continue to service its clients in the EU after the United Kingdom leaves,” the bank said in a statement.

They’re not alone — and like the Japanese banks, many are opting for Frankfurt as a new home. Earlier this week, Goldman Sachs’ European chief Richard Gnodde said his firm would “very probably” double numbers in Frankfurt when the U.K. exits the EU. According to reports, Morgan Stanley is also planning to move some staff to Frankfurt, as well as Dublin, Amsterdam and potentially other EU cities.

Frankfurt Main Finance, an advocacy group, has said that as many as 20 banks could move their operations to the western German city. In all, according to a post by the London School of Economics, nearly 20,000 finance jobs have already been earmarked for departure from the City.

That cascade may well pick up steam as Britain’s hopes of a “soft Brexit” seem to be colliding with reality in Brussels, where talks began this week on the divorce. U.K. Brexit Secretary David Davis conceded out of the gate that trade talks can only begin once the country is out of Europe, just the opposite of London’s initial plan. Embattled Prime Minister Theresa May arrived in Brussels Thursday to continue negotiations.

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