Jobs to go in Deutsche Börse and LSE merger
Carsten Kengeter, CEO of Deutsche Börse
The London Stock Exchange (LSE) says its all-share merger with Deutsche Börse could result in 1,250 job losses.
In March, after speculation and a rival bid, both parties reached agreement to create a Europe-based global markets infrastructure group valued at about £21 billion. The merger is expected to be finalised by the end of this year or early 2017.
Both companies have more than 5,000 staff and LSE hasn’t as yet expanded on the nature of the job cuts. However, both firms say they should be able to make cost savings of €450 million (£354 million) a year, which is about 20% of the combined group’s operating costs of €2.2 billion in 2015.
Speaking in March, Carsten Kengeter, CEO of Deutsche Börse, said: “Strengthening the link between the two leading financial cities of Europe, Frankfurt and London, and building a network across Europe with Luxemburg, Paris and Milan will strengthen European capital markets. It is the logical evolution for our companies in a fundamentally changing industry.”
The combined group will maintain its headquarters in London and Frankfurt. LSE will maintain a one-tier-board system, while Deutsche Börse will maintain a two-tier-board system subject to applicable co-determination rules.
The parties “anticipate” Deutsche Börse shareholders will hold 54.4%, and LSE shareholders will hold 45.6% of the enlarged issued and to be issued share capital of the combined group.
Behind the scenes
LSE says the exchanges’ subsidiaries, LSE’s LCH.Clearnet and Deutsche Börse’s Eurex, will still operate under their current brand names.
At present, LSE uses the MilleniumIT platform. This is provided by MillenniumIT, a Sri Lanka-based firm that specialises in electronic trading systems, which was acquired by LSE in 2009.
Deutsche Börse uses its in-house 7 Market Technology platform. The 7 Market Technology series comprises the T7 trading infrastructure, the C7 clearing infrastructure, the N7 global network, the M7 trading platform and the F7 trading system. The Deutsche Börse Group also offers licensing for this across the world.
Both companies are not saying what will happen with these platforms. They may keep running them separately as they are embedded and are working well enough to create additional revenue. Only time will tell.
