Deutsche Börse Interview

Yes We Can Make a Deal

Kengeter-Bostelmann-Bildfoliofor HB
Deutsche Börse CEO Carsten Kengeter sat down for an interview about beer, apple wine and the biggest merger of stock exchanges that Europe has ever seen.
  • Why it matters

    Why it matters

    Deutsche Börse and London Stock Exchange are hoping to create a European super exchange that can rival major competitors ICE and CME in the United States.

  • Facts

    Facts

    • The deal, which is worth $30 billion, will lead to the creation of the world’s third-largest trading platform. It is still subject to approval by regulators and shareholders.
    • If the tie-up goes ahead, a new holding company will be created with its headquarters in London, while each of the operators will maintain their own head offices in London and Frankfurt respectively.
    • The merger is expected to result in up to 1,250 job cuts, but Mr. Kengeter says they will be achieved by attrition.
  • Audio

    Audio

  • Pdf

These days Carsten Kengeter spends a lot of time in his adopted home in London, angering some back in Frankfurt who say he is neglecting his roots and turning his back on Germany’s financial capital.

However, the chief executive of Deutsche Börse revealed in an interview that he is still in touch with his German side, entering the meeting room on the 19th floor of the company’s headquarters in the town of Eschborn, near Frankfurt, with a spring in his step and beer bottles in his hand.

After enthusing about the local bars, he poured a glass of German beer for his guests before the interview began.

A former Goldman Sachs banker and head of Swiss bank UBS in London, the 49-year old rose to the helm of Deutsche Börse last year and began his tenure with a flurry of acquisitions. He started this year off with another bang, announcing a planned “merger of equals” with the London Stock Exchange.

Mr. Kengeter, who heads Germany’s largest stock exchange operator, is hoping soon to lead a European superpower of sorts that can rival the biggest stock exchange operators in the world. He will become the head of a new holding company, should a $30-billion merger with the London Stock Exchange announced earlier this year go through.

If things go as planned, the merger means Mr. Kengeter may spend even less time in Frankfurt. The joint Deutsche Börse-LSE holding company will be headquartered in London.

But a lot can happen between now and the closing of the deal: Politicians on either side of the Channel are wary of their financial capitals losing influence; numerous regulators, including in the state of Hesse where Deustche Börse is located, still have to approve the takeover; and shareholders of both companies have to give their blessing in July as well.

And then there is this month’s big political event standing in Mr. Kengeter’s way: Britain’s June 23 referendum on whether to remain in the European Union.

029 Deutsche Börse-WTB 2015 resume 01

Mr. Kengeter is well aware of Deutsche Börse’s past failures – this marks the third time it has tried to take over LSE – and freely admitted there remain a whole series of hurdles to the latest deal: “Of course it is possible that the merger still won’t come together,” he told Handelsblatt. But he remains hopeful that, this time, all the hurdles can be cleared.

Even a possible British exit from the European Union leaves him undeterred. Mr. Kengeter has repeatedly said the merger will not be affected by the referendum’s outcome, though it could be a political minefield. The biggest challenge: Mr. Kengeter admitted to Handelsblatt that a “Brexit” could prompt a rethink about whether the headquarters should be in London.

What follows is the full interview with Deutsche Börse’s chief executive.

Handelsblatt: Mr. Kengeter, since we’re on the subject of drinking, which do you prefer the local Frankfurt specialty, Apfelwein, or British cider?

Carsten Kengeter: Apfelwein, what else? And definitely not mixed with lemonade.

But there must be something you like better about London than Frankfurt?

London is and will remain the financial capital of Europe. London has the highest capital turnover, there are international investors there who want to invest money in Europe. It’s precisely those customers that we want to look after better by merging.

Yet there’s a widely held view in Frankfurt that the planned merger with the London Stock Exchange is only good for Deutsche Börse and not for the city.

On the contrary. By building a bridge to London, and thereby to the biggest financial center in the world, we’ll be giving Frankfurt and the German economy a direct link to the world’s largest financial center.

Want to keep reading?

Subscribe now or log in to read our coverage of Europe’s leading economy.