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09 May 2011

FN: Clearing house merger talks collapse


Talks between the US post-trade group the Depository Trust & Clearing Corporation and European Multilateral Clearing Facility, the Netherlands-based equities clearing house, regarding a potential deal have collapsed, according to three people familiar with the matter.

The two institutions had been in discussions for more than a year regarding a deal in which the DTCC would buy a controlling stake in EMCF, Europe’s second largest equities clearing house, from the company’s majority shareholder, ABN Amro. The Dutch bank owns 78 per cent of the European clearing outfit with the rest owned by Nasdaq OMX.

The DTCC and ABN Amro entered into discussions as early as February last year, according to one source, but the talks have recently ceased and have been described as “dead” by two people familiar with the matter.

The sources did not disclose the exact terms of the proposed deal, although it is understood that the DTCC envisaged merging EMCF with EuroCCP, its European cash equities clearing subsidiary and an aspiring rival to EMCF.

The sources said the two parties could not agree on the price of EMCF, which ABN Amro had initially valued at more than €100m. Although ABN Amro subsequently reduced the asking price “significantly” the DTCC determined that it would not be able to achieve the cost savings necessary to make a deal worthwhile, according to three sources familiar with the discussions.

Press release (FN subscription needed)



© Financial News

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