5. Preparing for Brexit

In June 2016, the UK held a referendum on its European Union (EU) membership. Voters chose to leave the EU by a slender majority. This resulted in the official decision of the UK government to withdraw from the EU, an action which is commonly known as “Brexit”. In March 2017, the UK gave formal notice to the European Council of its intention of Brexit and began the withdrawal negotiation process, which was frustrated by formidable challenges due to the nation’s political imbroglio.

It was expected that Brexit could seriously disturb the European operations of SMBC, which were managed through a UK-based subsidiary, Sumitomo Mitsui Banking Corporation Europe Limited. In order to ensure the continued, stable business and services to customers in Europe even after Brexit, SMBC established SMBC Bank EU AG, a new wholly owned banking subsidiary, in Frankfurt, Germany. SMBC Nikko Securities also established SMBC Nikko Capital Markets Europe GmbH. The two new companies commenced operations in April 2019. For the location of the new establishments, Frankfurt was selected from among several candidates under consideration, including Paris, Brussels, Amsterdam, and Dublin. Frankfurt was chosen partly because it is the home of the European Central Bank (ECB) as well as a leading financial center with an abundant supply of financial professionals.