* Merger deal upset by Brexit
* Kengeter faces German demands HQ move to Frankfurt
* Lawmaker Boddenberg says London out of question
By John O'Donnell and Andreas Kröner
FRANKFURT, Feb 22 The head of Deutsche Boerse
came under renewed pressure to ensure Germany has
greater sway over the group after its merger with the London
Stock Exchange, ahead of a meeting with regional
lawmakers on Wednesday.
The $27-billion-plus deal to create Europe's biggest stock
market was struck before Britain voted to leave the European
Union. It is now entering a critical phase, with European
antitrust officials due to decide by April 3 whether to approve
Brexit has prompted German politicians to demand that the
merged company's headquarters move to Frankfurt, setting the
scene for a clash with Britain as it seeks to safeguard London's
standing as Europe's financial capital.
On Wednesday, Chief Executive Carsten Kengeter will attend a
reception hosted by Deutsche Boerse for local lawmakers in
Wiesbaden, the capital of Hesse, people familiar with the matter
said. Hesse is home to Frankfurt, where Deutsche Boerse is
He is expected to face a grilling as politicians reiterated
calls by Hesse's finance minister that the headquarters move to
"I think the idea of having the holding company in London is
out of the question and, in this regard, I share the view of
(German financial regulator) Bafin," said Michael Boddenberg, a
member of Chancellor Angela Merkel's Christian Democrat party in
the regional parliament.
Under the merger deal, Kengeter is due to head the group,
while the main holding company and its board will be based in
LSE Chief Executive Xavier Rolet recently insisted that "the
deal is set".
But Britain's split from the 28-member bloc will isolate
London and that has turned the tables in favour of Frankfurt,
the financial capital of Europe's biggest economy.
Tobias Eckert, a lawmaker with the Social Democrats, said he
hoped Kengeter would talk about switching to Frankfurt.
"If you hold an event like this with Hesse's politicians and
at a time like this, then it can't be just about a nice meal and
chatting about the weather ... he has to say something of
substance," Eckert said. Deutsche Boerse declined to comment.
Kengeter is also under scrutiny after German police and
prosecutors, investigating possible insider trading by the
executive, searched his office and apartment.
A switch to Frankfurt would face resistance in London. This
week a small group of British parliamentarians urged the
government to block such a shift.
Bill Cash, a eurosceptic Conservative lawmaker, said keeping
LSE's headquarters in London was a matter of national interest
and that the British government must protect the "crown jewels".
Simon Kirby, the minister responsible for the City of
London, played down the prospect of such a move.
The location of the merged group has symbolic and
operational significance, with regulators keen for oversight of
its derivatives processing business.
LCH Clearnet, which is majority owned by the London Stock
Exchange, clears more than half of all interest rate swaps
traded around the world, many of which are in euros.
LCH Clearnet has already offered to sell its French clearing
business. LSE and Deutsche Boerse are also planning further
concessions to satisfy the EU antitrust authorities, two sources
familiar with the matter have said.
(Writing by John O'Donnell; Editing by Susan Fenton)