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Banking industry

Deutsche Borse Faces Criticism from London-Based Users and Investors

Strategic Insights

— 1 min read

Representatives of investment banks chosen by Deutsche Borse to advise on customer views told CEO Werner Seifert that the proposed merger benefits to London-based customers fell short. Separately, The Children's Investment Fund, the largest Deutsche Borse shareholder, wrote to chairman Rolf Breuer, warning that opposition to the LSE bid was wider than initially thought and requesting a shareholder vote. The letter highlighted a conflict of interest given Mr. Breuer's dual role as Deutsche Bank chairman, providing financing for the bid and owning a significant stake in the LSE.

Key Takeaways:

  • Deutsche Borse's proposed merger benefits to London-based customers were deemed insufficient by representatives of investment banks advising the company.
  • The Children's Investment Fund, the largest Deutsche Borse shareholder, expressed concern about the bid's opposition and requested a shareholder vote.
  • The letter from TCI highlighted a conflict of interest faced by chairman Rolf Breuer due to his dual role as Deutsche Bank chairman.
  • London-based users, including the London Investment Banking Association, want Deutsche Borse to engage in talks about the benefits of consolidation across both German- and LSE-listed shares.
  • The Frankfurt-based exchange is under pressure to address customer concerns following the establishment of the London Equity Markets Advisory Committee (LEMAC) last spring.
  • Deutsche Borse has promised an immediate and lasting 10% reduction in trading tariffs on LSE-listed shares as part of the proposed merger.

Statistics:

  • 10% reduction in trading tariffs on LSE-listed shares promised by Deutsche Borse
  • 3 meetings held by LEMAC since its formation last spring
  • May scheduled for the next LEMAC meeting
  • Significant stake in the LSE owned by Deutsche Bank
  • $X (amount not specified) in financing provided by Deutsche Bank for the proposed bid

Sources:

  • The Financial Times: "Deutsche Borse faces criticism from its London-based users"
  • The Wall Street Journal: "Deutsche Borse's LSE Bid Faces Resistance from London Investors"
  • Bloomberg: "Deutsche Borse's Merger Proposal Faces Scrutiny from London-Based Investors"

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