FRANKFURT Top executives from Deutsche Boerse and the London Stock Exchange will meet a top German politician to resolve a dispute about where to locate the combined group's headquarters, three sources said, with pressure growing for it to be in Frankfurt.
The meeting on Jan. 17 comes as Britain's government prepares to trigger divorce talks with the European Union, a move that has put a question mark over the deal and created uncertainty over the City of London's future.
Britain's departure from the 28-member bloc would place London, Europe's financial capital and planned headquarters of the new group, outside the EU.
German regulators, fearing a loss of control, want Frankfurt to play the leading role, or, at the very least, be one of two headquarters.
The meeting will be held in Wiesbaden, in the state of Hesse, where Frankfurt is also located. It will be attended by one of Germany's top politicians, Volker Bouffier, the state's premier and an ally of Chancellor Angela Merkel.
"Those at the meeting want to come face to face to find out what could work but nothing will be finalised," said one of the people with knowledge of the plans, adding that the question of where the headquarters should be would be high on the agenda.
London Stock Exchange Chief Executive Xavier Rolet and Carsten Kengeter, head of Deutsche Boerse, will travel to the meeting. The chairmen of both firms, Deutsche Boerse's Joachim Faber, and Donald Brydon from the LSE, will also attend.
Deutsche Boerse and the London Stock Exchange declined to comment. Bouffier's office could not immediately be reached.
LSE management want the headquarters to stay in London. But it is unlikely that Germany will agree.
Shortly after the vote in Britain to leave the European Union, Germany's financial market regulator, Felix Hufeld, said London could not host the headquarters.
This position has since hardened, creating a hurdle to the planned $25 billion merger.
On Wednesday, the head of the European Central Bank, Mario Draghi, said that it too would carefully look at the proposed merger, particularly given Britain's decision to leave the EU.
"The United Kingdom's withdrawal (from the EU) may lead to a loss of oversight and supervision of UK central counterparties by the ECB," Draghi wrote in a letter to a European lawmaker.
(Additional reporting by John O'Donnell and Arno Schuetze; writing by John O'Donnell; Editing by Elaine Hardcastle)