Deutsche Börse Plugs Frankfurt Clearing Ahead of LSE Merger

Carsten Kengeter is pitching the takeover of LSE as Frankfurt’s only chance of securing a key euro-denominated business.

Deutsche Börse chief executive officer, Carsten Kengeter, is planning to pitch the takeover of London Stock Exchange Group (LSE) as Frankfurt’s sole chance of winning a key euro-denominated business, according to sources quoted in Bloomberg today.

Kengeter’s renewed attempts to win over German officials and investors comes amid post-Brexit conflicting opinions between European leaders regarding which city should become the new centre for clearing euro-denominated trades.

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Most euro clearing currently occurs in London, but the UK’s departure from the EU has put that business up for the taking with cities including Paris battling to win it.

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German officials are against Deutsche Börse moving the headquarters of its holding company to London as part of the tie-up. Kengeter’s pitch suggests that the deal could be crucial in protecting Frankfurt’s existing clearing business.

Finding a compromise on the new holding company’s location may entail establishing the headquarters outside the UK to obtain approval for the merger, or perhaps even creating dual holding companies.

In a near-unanimous vote, LSE shareholders approved the merger on Monday. German Finance Minister Wolfgang Schaeuble said that Deutsche Börse should remain subject to EU rules if the LSE deal goes ahead. The location of the company’s headquarters is less important than where the business operations take place.


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