Finance Watch -- WSJ
September 29 2016 - 3:02AM
Dow Jones News
EXCHANGES
Deutsche Börse, LSE Face Antitrust Probe
The European Union's antitrust regulator opened an investigation
Wednesday into the proposed merger of Deutsche Börse AG and London
Stock Exchange Group PLC, citing concerns that the deal could
reduce competition in several financial markets.
The European Commission said the merger could affect clearing
functions, derivatives, repurchasing agreements, German stocks and
exchange-traded products and that it would create by far the
largest European-exchange operator.
"Financial markets provide an essential function for the
European economy. We must ensure that market participants continue
to have access to financial-market infrastructure on competitive
terms," EU antitrust chief Margrethe Vestager said.
The LSE said it would try to head off some concerns by exploring
the sale of its clearing unit, LCH SA. It said any sale of the unit
would be subject to the merger with Deutsche Börse going ahead.
The commission said it was concerned the combination of both
companies' clearinghouses could hurt competing trading platforms
that depend on LSE's clearinghouse. It would establish the largest
collateral pool in the world, at around EUR150 billion ($168
billion), used to guard against risk when clearing transactions,
the EU noted.
--Natalia Drozdiak
IPO MARKET
Chinese Postal Bank Starts Off Slowly
The world's biggest initial public offering this year limped out
of the starting gate, closing slightly higher with help from the
Goldman Sachs Group Inc. traders tapped to support its shares.
Shares in Postal Savings Bank of China Co. rose 0.2% to 4.77
Hong Kong dollars (62 U.S. cents), as investors showed little
enthusiasm for China's sixth-biggest lender after it raised $7.4
billion in the IPO.
Traders at Goldman Sachs bid for shares as others looked to
sell. The Wall Street bank had been tapped as the stabilization
agent, meaning it was responsible for a smooth first day of trading
in Postal Savings Bank's shares.
--Alec Macfarlane, Ese Erheriene
DEUTSCHE BANK
Abbey Life Unit Sold for $1.2 Billion
Deutsche Bank AG sold its U.K.-based Abbey Life insurance unit
to Phoenix Group Holdings Ltd. for $1.2 billion, boosting the
German lender's capital cushion slightly amid intense focus on its
financial health.
The deal will result in a pretax loss of roughly $897 million
for Deutsche Bank from goodwill and other write-downs, but the bank
said overall the sale would add 0.1 percentage point to a closely
watched capital measure, its common equity Tier 1 capital ratio.
That ratio stood at 10.8% at midyear.
The capital-ratio improvement stems from newly toughened
regulatory requirements that have dogged Deutsche Bank and other
European lenders. Abbey Life's business -- which includes managing
annuities and derivatives based on anticipated life expectancy --
is risky under capital rules. Therefore, even though Deutsche Bank
is taking a loss getting Abbey Life off its balance sheet, the sale
reduces the bank's risk-weighted assets and improves its vital
capital ratio.
--Jenny Strasburg, Andrea Thomas
(END) Dow Jones Newswires
September 29, 2016 02:47 ET (06:47 GMT)
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