Ready for Brexit Europe, Middle East & Africa
LONDON A CENTURY OF CONNECTING EUROPE WITH ASIA TOKYO With a presence in London since 1918 and rooted in the stability of Japan and growth of Asia, SMBC reaches out around the world to provide the advice, connections and support that create value. Our clients choose SMBC because we offer local knowledge and global expertise that span a wide range of financial services. SMBC will strive to be your bank of choice through the next century and beyond. Beyond finance, beyond boundaries. 2
Preparations for Brexit Background The United Kingdom is due to withdraw from the European Union on 29 March 2019. As a result of Brexit, it is possible that SMBC Group s UK subsidiaries for banking and securities Sumitomo Mitsui Banking Corporation Europe Limited (SMBCE) and SMBC Nikko Capital Markets Limited (SMBC Nikko) respectively could face restrictions in providing certain services in the European Economic Area. The priority of SMBC Group is to ensure that we can continue to provide our clients in the EEA with sustainable and reliable banking and securities services without disruption. New entities SMBC Bank EU New passporting hub for banking products and services post-brexit Will serve clients in the EEA*. SMBC Nikko CM Europe New passporting hub for securities products and services post- Brexit Will serve clients in the EEA. Changes SMBC Group has obtained regulatory approval to establish two new subsidiaries in Frankfurt, Germany. SMBC Bank EU AG and SMBC Nikko Capital Markets Europe GmbH will be ready to serve clients with banking and securities services respectively from March 2019. SMBCE branches in Amsterdam, Dublin, Madrid, Milan and Prague will transfer to the new banking subsidiary. Paris will remain a branch of SMBCE and be converted into a third country branch. *Our Belgian, French and German customers will continue to be served by SMBC Brussels branch, SMBCE Paris branch and SMBC Düsseldorf branch respectively. 3
Post-Brexit European Network Banking and securities entities New entity Banking New entity Securities SMBC SMBCE SMBC Bank EU SMBC Nikko SMBC Nikko CM Europe Japan credit institution UK credit institution EU credit institution UK investment firm EU investment firm Head office TOKYO LONDON FRANKFURT LONDON FRANKFURT Branches LONDON PARIS Entity BRUSSELS DÜSSELDORF DUBLIN FRANKFURT Branches transferring from SMBCE to SMBC Bank EU AMSTERDAM AMSTERDAM DUBLIN DUBLIN MADRID LONDON BRUSSELS PARIS MADRID MILAN MILAN PRAGUE PRAGUE AMSTERDAM DÜSSELDORF PRAGUE FRANKFURT MILAN MADRID 4
How will our Brexit planning affect you? Banking products including foreign exchange and derivatives Products There will be no change to the range of our banking products and services in the EEA including lending, deposit, foreign exchange and derivatives. Securities products including debt capital markets, equity capital markets, fixed-income sales and trading and equity sales and trading. There will be no change to the range of our securities products and services in the EEA including brokerage, underwriting and derivatives. Existing transactions with SMBCE and SMBC Nikko All SMBCE Milan branch transactions will transfer to SMBC Bank EU prior to Brexit. Some derivatives and FX transactions with EEA customers will also be transferred to SMBC Bank EU prior to Brexit. Any other transactions will in principle remain and transfer upon renewal or upon the occurrence of a relevant life cycle event. Transactions with SMBCE Paris branch SMBCE Paris branch will continue to serve its French customers. Due to the short settlement cycle on cash securities transactions, we do not anticipate that there will be existing transactions remaining after Brexit. Not applicable. How this affects you No change. Our aim is to minimise any inconvenience for you, and we look forward to working with you to transfer any relevant transactions. No change. 5
How will our Brexit planning affect you? Banking products including foreign exchange and derivatives Securities products including debt capital markets, equity capital markets, fixed-income sales and trading and equity sales and trading. Transactions with other SMBC Group EU entities All existing transactions in our SMBC Düsseldorf and SMBC Brussels branches will remain. New transactions In principle, all new post-brexit transactions in the EEA will be booked in SMBC Bank EU (some exceptions for derivatives apply). Not applicable. In principle, all new post-brexit transactions in the EEA will be booked in SMBC Nikko CM Europe. How this affects you No change. Your future banking and securities business in the EU with SMBC Group will be carried out from SMBC Bank EU and SMBC Nikko CM Europe. Account opening Both entities will open accounts in order to be ready to operate from March 2019, and we will be in touch to provide you with the necessary suite of documents for account setup. Know your customer For existing customers, both entities will rely on existing KYC documentation it already has in their possession. 6
Timeline Ready for business SMBC Bank EU (including its branches) and SMBC Nikko CM Europe will be ready to serve you by Brexit day on 29 March 2019. We will be discussing specific timelines with you directly and will keep you informed of our implementation plans. 2018 2019 29 March 2019 Brexit day Oct Nov Dec Jan Feb Mar Beyond New Frankfurt entities SMBC Nikko CM Europe authorised SMBC Bank EU authorised Market infrastructure connection Notification to customers Customer onboarding Migration pre-brexit Branch transfer Ready for operations Migration post-brexit SMBCE Paris branch SMBCE Paris becomes a third country branch (subject to transition agreement) 7
Frequently Asked Questions How will SMBC Group be affected by Brexit? SMBC Group currently uses SMBCE and SMBC Nikko s single passports to market its products and services throughout the EEA. Due to the planned withdrawal of the UK from the EU, it is possible that both SMBCE and SMBC Nikko could face restrictions on certain services they provide. Why did you choose Frankfurt as the location for the two new subsidiaries? Our priority has always been to ensure that we are able to provide our clients in the region with stable and reliable financial services. This formed the core of our location analysis; other influencing factors included our ability to use existing resources, transferability of operations, cost, language, tax, and the availability of necessary human resources. What products and services will SMBC Bank EU and SMBC Nikko CM Europe carry out? In principle, the operations of SMBC Bank EU will be the same as that of SMBCE and SMBC s branches in the EMEA region. Similarly, the operations of SMBC Nikko CM Europe will be the same as that of SMBC Nikko. What is the external credit rating for SMBC Bank EU? SMBC Bank EU has an external credit rating of A/A-1 from Standard & Poor s. This is the same rating as SMBC and SMBCE. What date will SMBC Bank EU and SMBC Nikko CM Europe start operating? We intend for both subsidiaries to be ready to start operations in March 2019 so that we can continue offering banking and securities services to clients in the EEA without disruption post-brexit. What should I do if I am an existing derivatives client of SMBC Nikko based in the EEA? In principle, new post-brexit derivatives transactions will be arranged by SMBC Nikko CM Europe and booked in SMBC Bank EU. Existing transactions may be either transferred to SMBC Bank EU or remain in SMBC Nikko. If a life cycle event occurs in relation to a transaction post-brexit, the transaction may need to transfer to SMBC Bank EU. 8
Frequently Asked Questions How would a no-deal Brexit impact SMBC Group s Brexit plans? The purpose of establishing the new banking and securities subsidiaries is to ensure that, even in the case of a no-deal Brexit, SMBC Group can continue to offer financial services to clients without disruption once the UK leaves the EEA. What will happen to the existing SMBC Düsseldorf and Frankfurt branches? They will remain as branches of SMBC serving customers in Germany and continue to operate as they currently do. What will happen to transactions booked in other EMEA branches? All other existing transactions at other SMBC Group EMEA entities will remain unchanged. How would a transition period post-brexit impact SMBC Group s Brexit plans? Even if a transition period were agreed between the UK and the EU, we intend for both SMBC Bank EU and SMBC Nikko CM Europe to start operations in March 2019. What will the role of SMBCE be post-brexit? SMBCE will continue to provide products and services to customers in the UK and countries not covered by SMBC Bank EU. What will happen to the SMBCE branches outside the UK? SMBCE branches in Amsterdam, Dublin, Madrid, Milan and Prague will transfer to SMBC Bank EU. Paris will remain a branch of SMBCE and be converted into a third country branch. Please contact your relationship manager or email our dedicated Brexit teams for any queries you may have. Banking products brexit@gb.smbcgroup.com Securities products smbcnikkobrexit@smbcnikko-cm.com 9
Disclaimer This document has been prepared by one or more of the companies forming part of SMBC Group, being Sumitomo Mitsui Financial Group, Inc. and each of its direct and indirect subsidiaries including, without limitation, Sumitomo Mitsui Banking Corporation ( SMBC ), Sumitomo Mitsui Banking Corporation Europe Limited ( SMBCE ), JSC Sumitomo Mitsui Rus Bank ( SMBCR ) and SMBC Nikko Capital Markets Limited ( SMBC Nikko ). This document is provided for information purposes only. It does not constitute or solicit an offer or commitment by any member of SMBC Group to underwrite or extend any credit, subscribe for or place any securities, buy or sell any security or financial instrument or to provide any other services nor (save to the extent explicitly contracted for outside of this document) is it intended as investment or other advice or as a recommendation that you, or any other person, participate in any transaction. Prior to participating in any transaction you should (a) make your own independent judgment if such transaction is suitable for you (without reliance upon any information contained in this document or provided by any member of SMBC Group or any of their advisers); (b) consult your own independent, competent, legal, financial, accounting, regulatory and/or other professional advisers; and (c) take full responsibility for the economic risks and merits as well as the legal, financial, corporate, tax and accounting characteristics and consequences of the proposed transaction. This document is not intended to form the basis of any investment decision. There may be, amongst others, tax, corporate, financial, accounting, legal or regulatory consequences to any proposed transaction and no member of SMBC Group nor any of their advisers express any opinion on these matters; you should consult with experienced advisers on tax, accounting, legal, financial and regulatory matters. Capital markets, derivatives and other investment banking activities may be performed by a combination of SMBC Nikko Securities America, Inc., SMBC Nikko Securities, Inc., SMBC Capital Markets, Inc. and SMBC Nikko. SMBC Nikko may also provide M&A Services to its customers in EMEA and may co-advise with SMBC Nikko Securities Inc.. Lending and other commercial banking activities are performed by, various members of SMBC Group including (without limitation) SMBC, SMBCE and SMBCR. This document may not be forwarded or distributed to any other person and may not be reproduced in any manner whatsoever. Any forwarding, distribution or reproduction of this document in whole or in part is unauthorised, without our prior written consent, except to your professional advisers to assist you in evaluating these materials. By accepting a copy of this document, you agree to be bound by the foregoing limitations and conditions. This document and any non-contractual obligations arising out of or in connection with it shall be governed by English law and subject to the jurisdiction of the English courts. 10
Authorisations & Regulation SMBC The Japanese Financial Services Agency (JFSA) is the home regulator of Sumitomo Mitsui Banking Corporation (SMBC) and has a shared responsibility for regulating branches with the individual branch s host regulator. Whilst the JFSA does not have direct responsibility for individual overseas subsidiaries, it does regulate them indirectly through its responsibilities for SMBC as a whole. SMBC Brussels Branch Financial Services & Markets Authority and National Bank of Belgium. SMBC DIFC Branch Dubai Regulated by Dubai Financial Services Authority (DFSA). SMBC DIFC Branch Dubai has been granted a Category 1 license which allows them to only deal with those persons defined as a Professional Clients or a Market Counterparty. SMBC Düsseldorf Branch Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and Deutsche Bundesbank. SMBC Frankfurt Branch BaFin and Deutsche Bundesbank. SMBC London Branch Authorised and regulated by the JFSA. Authorised by the Prudential Regulation Authority. Subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. SMBCE Sumitomo Mitsui Banking Corporation Europe Limited (SMBCE) is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Both regulators are the home regulators of SMBCE, and have a shared responsibility for regulating SMBCE branches with the host regulators of these branches as stated below. SMBCE Amsterdam Branch SMBCE has been granted permission by De Nederlandsche Bank (Dutch Central Bank) to provide services in the Netherlands as meant in Article 2:14 of Wet op het financieel toezicht (Dutch Financial Supervision Act) (Wft). The Amsterdam office is a branch of SMBCE as defined in Article 2:14 of Wft and is registered as such with DNB and Autoriteit Financiële Markten (the Netherlands Authority for the Financial Markets) (AFM). SMBCE Dublin Branch Central Bank of Ireland. SMBCE Madrid Branch Banco de España (Bank of Spain) and Comisión Nacional del Mercado de Valores (Spanish National Securities Market Commission) (CNMV). SMBCE Milan Branch Banca d Italia (Bank of Italy) and Commissione Nazionale per le Società e la Borsa (Italian Companies & Exchange Commission) (Consob). SMBCE Paris Branch Autorité de Contrôle Prudentiel et de Résolution (Prudential Supervision & Resolution Authority) (ACPR) and Autorité des Marchés Financiers (Financial Markets Authority) (AMF). SMBCE Prague Branch Česká Národní Banka (Czech National Bank). SMBC Nikko SMBC Nikko Capital Markets Limited is authorised and regulated by the Financial Conduct Authority (FRN 171935). SMBC Bank EU SMBC Bank EU AG is authorised by the European Central Bank and regulated by BaFin and Deutsche Bundesbank. SMBC Nikko CM Europe SMBC Nikko Capital Markets Europe GmbH is authorised and regulated by BaFin and Deutsche Bundesbank. SMBCR JSC Sumitomo Mitsui Rus Bank (SMBCR) is authorised and regulated by the Central Bank of the Russian Federation. 11