Goldman warns LSE may lose out on Italy income

SHARES in the London Stock Exchange fell more than five per cent in trading yesterday after Goldman Sachs analysts cut it to a sell rating over its exposure to Italy.

The LSE, which updates the market on its trading today, owns Italian clearing house CC&G and makes up to 38 per cent of its earnings from interest generated by the trades it clears.

That could be under threat, analyst Chris Turner warned, as the deteriorating Italian market causes the cost of clearing trades to rise. This could make it cheaper for Italy’s banks to clear trades and loans through the European Central Bank, leaving CC&G unable to keep growing at the pace seen over the past 15 months.

“We do not see this elevated level of interest income as sustainable and reduce our net interest income forecasts,” Turner said in a note.