Clearstream In Takeover Fight As Chief Executive Steps Aside

by Ulrika Lomas, Tax-News.com, Brussels

17 May 2001

One of the most pressing needs of the European securities trading industry is the creation of a pan-European clearing, settlement and share registration agency, in order to reduce the exorbitant costs of clearing, which are reckoned to be up to seven times higher than they are in the US.

Hence the fight that is building up for control of Clearstream, the Luzembourg-based clearing operation which is owned 50/50 by Deutsche Borse and Cedel, a bond-clearing co-operative owned by 93 European banks. Deutsche Borse wants to buy out Cedel's 50% stake, but a group of Cedel's owners including the large investment banks who supply most of the liquidity to Europe's bourses want to compete in the auction.

The European Securities Forum, which represents 24 big investment banks, said on Wednesday that any attempt by Deutsche Börse to gain majority control of Clearstream would be "a move in the wrong direction" and would result in higher costs for users and investors. Instead, they want to merge Clearstream with Brussels-based Euroclear, which would indeed be a step on the road towards a European-scale clearer.

Meanwhile, Clearstream is struggling to clear itself, in this case of allegations made in February in a book, 'Revelations', by former Luxembourg banker Ernest Backes, that Clearstream operates secret sub-accounts which allow money-laundering transactions to take place out of sight of regulators.

Clearstream has confirmed that its chief executive, André Lussi, and two other executives were stepping aside because of an official investigation by the Luxembourg authorities into the allegations. "These actions were taken to facilitate the expeditious completion of the investigation," Clearstream said.

André Roelants, a Clearstream board member, was named as interim chief executive. He said Clearstream would cooperate with the probe to ensure it was completed "as quickly and effectively as possible." Mr Roelants is chairman of the executive committee of Dexia/BIL, a financial services company.

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