Nomura’s Ashley laments Brexit danger

Bloomberg

Steve Ashley, charged with turning around a slump at Nomura Holdings Inc.’s investment bank, faces one of his biggest challenges thousands of miles away from Japan.
Britain’s exit from the European Union threatens to create “two centers” for financial products on the continent, Ashley, head of wholesale and global markets at Nomura, said on Monday in an interview with Bloomberg Television. This will add to banks’ costs and complexity of operations, threatening those that are already struggling to turn a profit.
“That’s a great concern of ours,” said Ashley. “Equally, the cost for not just ourselves but for every single European bank to have separate pools for capital and funding is actually very dangerous for many banks that are not in great financial health.”
Ashley, an eight-year veteran at Nomura, is trying to arrest a slump at one of the world’s biggest investment banks, particularly a European subsidiary that has struggled ever since it bought operations from Lehman Brothers Holdings Inc. in 2008. His challenge has been compounded by Brexit, which is forcing banks to create new subsidiaries on the continent and pushing some of the market’s plumbing away from London as well.
Nomura will move 50 to 100 people to Frankfurt and elsewhere on the continent after the UK leaves the EU, mirroring moves announced by rivals including BNP Paribas SA, Ashley said. Yet the lender will still have to contend with the dislocation of Europe’s financial infrastructure, he said.

EUROPE MOVES
Ashley’s concerns follow the decision by CME Group Inc. to shift its $240-billion-a-day market for European short-term financing, the biggest in the region, from the UK capital to Amsterdam to avoid disruption. Another crucial London business under scrutiny is the so-called clearing of euro-denominated derivatives, which could trigger higher costs for banks if parts of it were moved to the continent. The biggest US banks, meanwhile, are planning to shift about 250 billion euros ($283 billion) of balance-sheet assets to Frankfurt because of Brexit, Bloomberg
reported November 11.
“The city of London has always had the ability to adapt, evolve and survive so in that sense I’m not concerned,” said Ashley, who is based in the UK capital. “What I am concerned about is there essentially being two centers of liquidity” for euro-denominated products — one in London and another on the continent, he said.
Nomura’s European business has lost money in four out of the past five quarters.