Investors set to back LSE sale to Germans

SHAREHOLDERS will today vote on a German takeover of the London Stock Exchange as opposition to the deal gathers pace.

The £21bn tie-up between LSE and Frankfurt-based Deutsche Boerse could become one of the first casualties of the Brexit vote after regulators publicly expressed their doubts.

It comes as the Bank of England grapples with the economic fallout from the referendum and prepares to cut interest rates to keep growth moving.

The LSE deal was widely expected to sail through and is thought to be strongly supported by investors.

Three- quarters of Deutsche shareholders must also give their approval, again a figure which is likely to be easily reached.

But it is facing increased resistance in Germany following Britain’s vote to leave the European Union.

The deal has been criticised in Britain because it will see German chief executive Carsten Kengeter take charge, with profits reported in euros and Deutsche shareholders taking a 54.4pc controlling stake.

However, the merged company’s corporate headquarters will be based in London – and this is attracting the ire of watchdogs on the continent.

They are strongly opposed to an agreement which would see the vast majority of Eurozone trading handled from beyond the EU.

Felix Hufeld of German regulator Bafin has warned there needs to be ‘an adjustment’ for the deal to go through – words widely taken to mean the company’s headquarters would have to move to the German financial centre in Frankfurt.

Politicians in the German state of Hesse, which must give its approval, are also thought to be highly sceptical.

The vote will begin another tumultuous week for the City as the fallout from Brexit continues to rain down.

After wild swings in share prices the blue chip FTSE 100 index appears to have calmed down, ending the week at a 2016 high after a major rally.

The pound – which dropped more than 10pc against the dollar after the result was announced – also seems to have stabilised, with little further movement at the weekend.

But the aftermath of the vote is likely to feature continued uncertainty.

Bank of England governor Mark Carney has said the risks to the economy are significant and there could be a recession.

The Bank is now widely expected to cut interest rates this summer, leading to potentially even cheaper mortgage rates.

It is also reported to be considering dropping a requirement for banks to set extra money aside under rules about a so-called countercyclical capital buffer meant to guard against shocks.

This rule could be abandoned on Tuesday, meaning lenders are free to pump more cash into the system.