Deutsche Boerse plans revenue share deal to lure Brexit clearing

Bloomberg

Deutsche Boerse AG’s clearinghouse plans to start a revenue-sharing plan with its biggest members in a bid to lure business from London after Brexit.
The Eurex Clearing partnership program will reward its 10 most active participants with a share of revenue, and give board seats at the clearinghouse to the five largest. Deutsche Boerse has already received interest from clearing members including JPMorgan Chase & Co., Citigroup Inc., Deutsche Bank AG and Morgan Stanley, the company said in a statement Monday.
“This market-led initiative will benefit clients and the broader marketplace through greater choice and competition, improved price transparency as well as reduced concentration risk,” Eric Muller, head of Eurex Clearing, said in the statement.
Clearinghouses stand between the two sides of a trade and hold collateral, known as margin, from both in case a member defaults. It’s a profitable business and Britain’s vote to leave the European Union has made clearing a key battleground for the financial-services industry.
London dominates the business: About 75 percent of trading in euro-denominated interest-rate swaps takes place in the UK, according to Bank for International Settlements data from April 2016. The London Stock Exchange Group Plc operates the world’s biggest clearinghouse, LCH.
Deutsche Bank CEO plans to meet Chinese investor
Deutsche Bank AG Chief Executive Officer John Cryan hasn’t yet met one of the bank’s top investors but plans to do so, a spokeswoman said.
“Of course” it will happen, the spokeswoman for Deutsche Bank said, when asked about a meeting between Cryan and Adam Tan, the head of HNA Group Co., a Chinese conglomerate that bought a 9.9 percent stake in the bank this year. Cryan has been avoiding a meeting with HNA, irking Supervisory Board Chairman Paul Achleitner, the Wall Street Journal reported on Sunday.
Cryan is facing skepticism about a strategy that was unveiled in March around the time HNA was increasing its stake.
Achleitner had helped attract the company as an investor, a person familiar said. HNA said in May that it had raised its stake to 9.9 percent from 3 percent in February, making it the bank’s largest
investor.
HNA has come under heightened scrutiny as Chinese authorities have clamped down on foreign acquisitions by Chinese investors. The ECB, Deutsche Bank’s euro area regulator, is considering launching an owner control procedure against HNA as the Chinese company is trying to bring transparency to its own ownership structure by turning itself over to a charity.
Two attempts to arrange a meeting between Cryan, 56, and HNA have failed, according to a person familiar with the matter who asked not to be identified because the discussion is private. The strategic overhaul announced in March was underpinned by a rights offer that hauled in 8 billion euros ($9.4 billions) for Deutsche Bank.
Cryan told people close to him that he would prefer not to meet with HNA executives, the WSJ
reported.
The report also said some senior executives at Deutsche Bank have occasionally gone directly to Achleitner, 61, to garner support for important decisions, rather than dealing with Cryan.
“It is normal for a German chairman to have regular interaction with all management board members,” the Deutsche Bank spokeswoman said.
HNA used collar trades from UBS Group AG to finance its purchase of Deutsche Bank shares, a strategy that can reduce the amount a buyer has to commit.