Deutsche Boerse boosts profits, eyeing LSE tie-up

FRANKFURT AM MAIN: German stock exchange operator Deutsche Boerse reported strong increases in earnings and profits for 2016, as it awaits regulators’ go-ahead for a tie-up with London Stock Exchange.

The Frankfurt-based firm saw profits rise 14 per cent to 811 million euros (US$859 million), adjusting for special items, while revenues added 8.0 per cent to reach 2.4 billion euros.

Underlying, or operating profit before interest and taxes grew almost 13.0 per cent to 1.2 billion euros.

“Our ongoing measures to enhance operating efficiency have shown their full effect,” finance director Gregor Pottmeyer said in a statement, with controlling costs a “major contribution to earnings growth” in 2016.

Chief executive Carsten Kengeter pointed to “progress made with the planned merger” with London Stock Exchange in the statement, offering no hints about the tie-up’s prospects as it faces scrutiny by regulators.

An LSE- Deutsche Boerse merger would create a financial markets behemoth competing with the likes of the Chicago Mercantile Exchange and ICE in the United States, as well as the Hong Kong stock exchange in Asia.

The prospect of creating one of the globe’s biggest groups for stock listings and market data has stoked competition fears among EU rivals.

LSE formally offered last week to sell clearing house LCH Clearnet SA to European competitor Euronext if the European Commission approves the deal at the end of a competition probe. Meanwhile, Kengeter himself is under investigation for insider trading over shares in Deutsche Boerse he bought in December 2015, shortly before the LSE merger plans were announced – sharply increasing the stocks’ value.

Deutsche Boerse says the shares were part of a revamped executive pay programme – and that in any case, the two stock market operators did not open tie-up talks until January 2016.

A report in German news weekly Der Spiegel last week suggested Kengeter had in fact discussed the planned merger with a German government official the month before the share purchase, although it did not cite any sources.

Deutsche Boerse told AFP last week it is fully cooperating with the investigation.