Nomura office
Nomura plans to seek German regulatory approval before finding office space in FrankfurtReuters

Japanese banks Daiwa and Nomura are both set to swap London for Frankfurt as a base for key European operations, as Brexit talks get underway.

Investment bank Daiwa said it will apply for a banking licence in Germany and intends to locate a new office in Frankfurt.

It said: "This arrangement will ensure that Daiwa can continue to service its clients in the Europe Union (EU) after the United Kingdom leaves the EU."

Larger bank Nomura has also picked Germany's financial centre as its base inside the European Union, according to Bloomberg.

Nomura plans to seek German regulatory approval later this month, before finding office space and transferring around 100 employees from London to Frankfurt.

Daiwa confirmed that its license application to German regulator Bafin is expected to be submitted by the end of the year.

This means its Frankfurt subsidiary will be up and running after 2017, but before Britain is set to officially leave the bloc in March 2019.

Daiwa's Frankfurt operation is expected to start with less than a hundred employees, staffed by a mix of local hires and transfers from other locations including London and Japan.

Daiwa has around 450 employees across Europe, most of which are based in London - which will remain its regional headquarters. Nomura employs over 3,000 staff in Europe, mostly in London.

US banks Goldman Sachs and Morgan Stanley are also understood to be hunting for office space in Frankfurt, to serve as new trading hubs inside the EU.