By Ulrike Dauer
FRANKFURT--Deutsche Boerse AG (DB1.XE) has set up a senior-level
task force to explore opportunities in Asia, the chief executive
said Wednesday, complaining of regulatory obstacles and high
operating costs in Europe.
Reto Francioni told the annual press conference that the
priority in Asia is to grow the company's existing business, with
less emphasis on joint ventures and cooperation agreements.
A year ago the European Union blocked the German exchange
operator from merging with NYSE Euronext (NYX) on competition
grounds. The tie-up would have created the world's largest stock
exchange operator. Earlier this month, U.S. antitrust authorities
cleared the way for IntercontinentalExchange Inc.'s (ICE) planned
takeover of NYSE Euronext.
Mr. Francioni said Deutsche Boerse doesn't have any immediate
plans for mergers and acquisitions in Asia. But that could change,
he said.
Deutsche Boerse already has a cooperation agreement with Korea
Exchange. The two firms signed an agreement in 2007 to help each
other in various ways, including by sharing information and
exchanging staff.
Mr. Francioni citied several reasons for the shift eastward.
Business and economic growth in Asia will remain dynamic and the
exchange's customers are active there, he said. He added that
market changes are making it easier for foreigners to do business
in Asia.
"Growth is happening in Asia, period," Mr. Francioni said.
"If the renminbi floats freely five years from now, you've got
to be there and if you aren't, you'll miss out."
By contrast, regulatory change in Europe, including plans for a
financial transaction tax and limits on high-frequency trade, will
make business less profitable there, he said.
The group expects Asia to contribute more than EUR100 million
($134 million) to overall revenue over the next three to five
years.
In 2012, Asia contributed 4%-5% of the group's net revenue of
EUR1.9 billion, said Chief Financial Officer Gregor Pottmeyer.
Deutsche Boerse also provided more detail on plans to cut costs
by EUR70 million annually by 2016. The company plans to cut jobs in
Luxembourg and its offices in the town of Eschborn, near Frankfurt,
mainly in administration and information technology. This could
involve ending contracts with consultants.
Some jobs will likely be transferred to the exchange's Prague
site, but other areas can't be ruled out, Mr. Pottmeyer said. He
said he is confident the job cuts will be achieved without
layoffs.
In Europe, measures such as early retirement, part-time work and
attrition can be used to shed jobs. The exchange has set aside
between EUR90 million and EUR120 million for severance packages and
other efforts to implement the cost cuts.
Write to Ulrike Dauer at ulrike.dauer@dowjones.com
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