By Ulrike Dauer
FRANKFURT--Deutsche Boerse (DB1.XE) Tuesday announced a
cost-cutting plan threatening 250 jobs, saying it expects weaker
trading volumes in the years ahead as a result of the tougher
regulatory environment.
The German exchange operator intends to slash annual costs 70
million euros ($95.5 million) over the next three years. The
company said it hopes to avoid outright layoffs through measures
like early retirement and reduced working hours.
"We intend to reduce staff costs by 30 million euros by giving
approximately 200 employees and about 50 executives the opportunity
to participate in a voluntary redundancy scheme," said Deutsche
Boerse spokesman Frank Herkenhoff.
This will require spending between EUR90 million and EUR120
million upfront on things like operational efficiency and to pay
for severance packages. Most of that will come from 2013
income.
Global exchanges have seen their revenues slump in recent years,
partly because of the decline in investor activity as a result of
the financial crisis. In part, though, thin trading volumes can be
attributed to the crackdown on the financial industry after the
2008 meltdown, which has prompted new rules for banks and financial
markets.
Exchanges add scale through mergers and acquisitions and by
growing their regular business. Short of that, they must cut costs.
After the European Union blocked its merger with NYSE Euronext
(NYX) last year, Deutsche Boerse is focusing more on savings.
Peer NYSE Euronext said Tuesday that accelerated cost cuts eased
the pain of a slump in revenues last year. NYSE is in the process
of merging with Atlanta-based IntercontinentalExchange Inc.
(ICE).
Deutsche Boerse said its savings plan will enable it to continue
investing in growth and infrastructure and in promising markets
like Asia.
The cost-cutting plans come on top of EUR150 million ($199.8
million) in cost cuts the exchange operator announced in 2010.
Deutsche Boerse completed that round of cuts at the end of
2012.
Write to Ulrike Dauer at ulrike.dauer@dowjones.com
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