London Stock Exchange-Deutsche Boerse merger under pressure from Germany, where politicians are worried about Brexit and company being based in UK

 
William Turvill
Follow William
GERMANY-FINANCE-STOCK-BRITAIN-MERGER
If the merger goes through, Deutsche Boerse shareholders would own 54.4 per cent of the new company (Source: Getty)

The proposed merger of Deutsche Boerse and the London Stock Exchange is facing increasing political scrutiny – with German politicians now voicing their concerns.

Members of the country's ruling Christian Democrats have questioned the wisdom and fairness of the merged organisation being based in the UK – especially if the nation votes for a so-called Brexit.

Read more: London Stock Exchange chief: Brexit impact would be "substantial

If the deal goes through, Deutsche Boerse shareholders would own 54.4 per cent of the new company and the German company's chief executive Carsten Kengeter would take charge.

The LSE's chief executive Xavier Rolet would make way, but the company would be based in London.

In the UK, members of the Treasury Select Committee have called for LSE executives to be called before them and quizzed on the deal.

Read more: London Stock Exchange battle heats up

One MP on the committee, Labour's John Mann, said: "This deal might not be in our national interest. Are we handing over control to the Germans? We need to just get up and get them in, and that’s a chance to explore all avenues."

In an interview with City A.M. last week, Rolet said: “If the committee wants to call us in, we’ll come in... We have very solid arguments. I don’t know why they would want to do so.”

Read more: LSE chief denies merger would see Germans take control

And now the deal is receiving increased scrutiny from Frankfurt.

Ulrich Caspar, a member of parliament in the German state of Hesse, where Frankfurt is located, told the Financial Times: "It's a problem if the headquarters of the holding company will be outside the euro zone and, if Brexit happens, outside the EU...

“The terms are detrimental to the development of Frankfurt as a financial centre."

Read more: MPs call for LSE "merger of equals" parliamentary scrutiny

On the possibility of a Brexit vote, Clemens Reif, who is also a Christian Democrats representative in Hesse, told the newspaper: "The danger for Frankfurt. . .  is that the headquarters for both stock exchanges will no longer be in an international financial centre, but in a city whose significance worldwide will be declining.”

Jonathan Goslin, an analyst at Numis Securities, told City A.M. last month that intervention from politicians is “in line with expectations” and is one of the “key problem areas” for the deal.

Related articles