Japan’s SBI plans Hong Kong withdrawal due to security law concerns

The CEO of SBI Holdings, the financial conglomerate that owns Japan’s largest online brokerage, said he plans to pull his firm’s operations out of Hong Kong because “without freedom there is no freedom. financial activity ”.

Yoshitaka Kitao’s move will make SBI the largest Japanese financial institution to opt for a full Hong Kong exit, and comes as the group is also considering The statute of London as an optimal financial center in Europe.

The introduction of the Hong Kong controversy last year National Security Act, under which 47 activists were arrested earlier this month, has created growing fear in Japanese conference halls, Kitao said. In particular, he said, it was “not a good place for financial institutions,” adding that more and more Japanese companies were reconsidering the scale of their operations in the former British colony.

Japanese financial institutions, he said, were “very afraid” of developments in Hong Kong. Kitao, who is among the most outspoken figures in Japanese finance and who is invited to regular talks with Prime Minister Yoshihide Suga, said he is considering Singapore and Shanghai as alternatives as he prepares to move his operation. of 100 people in Hong Kong.

“If I want to do business in China, I would prefer to have an office in Beijing, Shanghai or elsewhere,” Kitao said, arguing that the regulatory uncertainty and the ability to just settle in China and operate according to its requirements. rules meant that Hong Kong was now less needed as a gateway to mainland business.

So far, Kitao said, SBI was probably the only major Japanese institution to speak so openly about its withdrawal from Hong Kong.

“They don’t look like me. I am a very simple guy. But everyone else in their belly thinks they should move or won’t invest more in Hong Kong, ”Kitao said. He added that while Japanese financial institutions were hesitant about their decisions, the country’s manufacturers, retailers and wholesalers were becoming increasingly determined to move operations from Hong Kong to mainland China.

In another signal of tectonic shifts in global finance, SBI is also reconsidering London’s appeal after Brexit as it rolls out a planned expansion of its global underwriting business. SBI aspires to become Japan’s fourth mega-bank and overtook Nomura last year as the country’s largest retail brokerage,

Britain’s exit from the EU, Kitao said, meant that while London would previously have been the simpler choice, SBI was now forced to look to alternative financial centers as it sought to grow a business. wholesale bank with which he planned to compete with Nomura, Daiwa. and other Japanese rivals.

“Today we are still wondering whether we will have an office or our premises in London, Amsterdam, Luxembourg or Frankfurt. . . a lot of money is flowing out of London to other cities, ”Kitao said. A UK-trained anglophile who previously worked in London, he lamented the city was no longer a simple choice.

Uncertainties over Hong Kong and London, Kitao said, had heightened the potential appeal of the Japanese city of Osaka – home of the country’s largest derivatives exchange – as a possible global financial center.

In particular, he said, London could benefit from a direct link to the Osaka Stock Exchange and the time difference would allow 24-hour trading on British and European instruments.

“London will always be OK. Although a lot of money is starting to flow, it will be OK, ”Kitao said.

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