A consortium of major US and European financial institutions is lining up a bid for London-based derivatives clearing house LCH.Clearnet. Deutsche Bank is acting as adviser on the acquisition, as well as being part of the bidding group.
An official representing the transatlantic consortium told Risk the group also includes BNP Paribas, Société Générale, UBS, JP Morgan, HSBC and Royal Bank of Scotland, along with interdealer broker Icap, which confirmed its involvement on February 2.
He added a small number of other major banks are also involved, with more firms interested in participating, but declined to give names.
Increased market turbulence and counterparty risk concerns have pushed clearing services into the spotlight since the early part of last year. In particular, regulators in Europe and the US view central clearing for credit derivatives as critically important for financial stability.
LCH.Clearnet has 109 clearing members and is 73.3% user owned, but the group wants the clearing house to be owned and run by a smaller number of active players.
Additionally, the consortium wants to break up a non-binding merger agreement for LCH.Clearnet signed on October 22, 2008 with US clearing giant, the Depository Trust & Clearing Corporation (DTCC). Concerns have been raised that a merger of the US and UK firms would stifle competition in the clearing space.
To date, no formal bid or timeframe has been set by the consortium. However, any proposition would need to be greater than the price agreed with the DTCC, which gave LCH.Clearnet an implied equity value of €739 million, or up to €10 a share. That deal is due to be completed on March 15, unless a counter offer is made.
More on Regulation
IMF argues redemption policy regulation should address illiquid assets
Powhatan's battle could set precedent for regulation of US energy markets
Pressure mounts to push through a crucial bill needed for CCP equivalence
Disagreement among FSB members pointed to by BoE letter
Sign up for Risk.net email alerts
Sponsored video: MarketAxess
Sponsored video: Tradeweb
Multifonds talks to Custody Risk on being nominated for the Post-Trade Technology Vendor of the Year at the Custody Risk Awards 2014
Sponsored webinar: IBM Risk Analytics
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.