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Brexit 'bolsters case for London Stock Exchange and Deutsche Borse merger'

Published 13/07/2016

There are proposals of a merger between the London Stock Exchange and the Deutsche Borse
There are proposals of a merger between the London Stock Exchange and the Deutsche Borse

A top German central banker has said that the case for a p roposed £21 billion merger between the London Stock Exchange (LSE) and Deutsche Borse has been "bolstered" by Britain's decision to quit the European Union.

Dr Andreas Dombret, a member of the Deutsche Bundesbank's executive board, also said that the deal needs to be "re-evaluated" in light of the Brexit vote.

He said: "The announced merger plans of Deutsche Borse and the London Stock Exchange need to be re-evaluated. The outcome might seem bizarre at first glance, but the referendum has given positive impetus to, and even bolstered, the economic rationale behind such a merger."

Dr Dombret added that once the UK has left the European Union, the merger has the potential to become a "bridge" between both economies.

Last week LSE shareholders voted overwhelmingly to approve the deal, while more than 50% of investors in Deutsche Borse have given their blessing to the tie up. Just 60% are needed to vote the deal through.

However, Dr Dombret flagged that the result of the vote means the deal will face new regulatory challenges and result in euro clearing services shifting from London to Frankfurt.

"Clearly, the Leave vote poses new challenges for the corporate governance of the merger: the parties concerned need to find a governance structure which balances all reasonable interests - even at the expense of synergies."

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