EU Economics

Stop Germans taking over the Stock Exchange, urges Tory grandee: Sir Bill Cash tells Business Secretary to use little known powers to block £21bn deal

  • Frankfurt-based Deutsche Boerse set to take over London Stock Exchange
  • Critics say £21billion deal could ‘destroy’ the 215-year-old institution
  • Business Secretary Sajid Javid urged to block the deal using rare powers
  • Enterprise Act 2002 could stop merger ‘to protect financial stability’
Tory backbencher Sir Bill Cash, pictured, has called on Business Secretary Sajid Javid to block a takeover of the London Stock Exchange by Deutsche Boerse
Tory backbencher Sir Bill Cash, pictured, has called on Business Secretary Sajid Javid to block a takeover of the London Stock Exchange by Deutsche Boerse

Business Secretary Sajid Javid was last night urged to use little-known powers to block a German takeover of the London Stock Exchange.

The £21billion deal has come under increasing pressure from critics who warn it would be against the national interest and could destroy a 215-year-old British institution.

The LSE and Frankfurt-based partner Deutsche Boerse have defended the deal as a ‘merger of equals’ and LSE chief executive Xavier Rolet insisted it was the ‘best deal on the table’.

The Government has so far refused to get involved in the takeover, saying it is a matter for the Stock Exchange itself.

But yesterday it emerged that Mr Javid could use rarely-exercised powers gifted to him in the 2002 Enterprise Act to block a deal if it is not in the public interest.

One specific reason he can give for refusal is the need to protect ‘the stability of the financial system’.

Tory backbencher Sir Bill Cash said it was essential Mr Javid acted without delay.

He said: ‘This is an attempt to manoeuvre German interests to further control the financial sector across the EU. I don’t see how it can be seen to be in British national interests.

‘The Business Secretary should look into the deal and take whatever steps are necessary in order to prevent British national interests from being subverted by German ones.

‘The EU has taken far too much control over our financial system anyway.’

The influential Treasury Select Committee is preparing to grill Chancellor George Osborne about it when he appears for questioning on April 19.

It also has the power to hold formal hearings and order company bosses to attend so they can account for their actions.

City grandees have warned there is huge uncertainty about what would happen if the new company collapsed.

Lord Paul Myners, a former Treasury minister who has served on the board of several major companies, said he feared British taxpayers could be left to foot the bill.

‘I don’t think regulators have fully thought through how they would handle a failing central clearing house,’ he said.

‘Central clearing houses are potentially one of the largest concentrations of risk in our financial system and they deserve more attention.’

Deutsche head Carsten Kengeter would take charge of the new company, which would be headquartered in London.

The new business would report profits in Euros and the Germans would have a 54.4 per cent controlling stake.

City watchdogs have already started scrutinising the fine print of the deal. Both the Bank of England and Financial Conduct Authority will have to give their backing before it goes ahead.

And influential Conservative peer Lord Norman Tebbit said Margaret Thatcher would never have allowed the London Stock Exchange to be sold off.

Mr Javid, pictured, could use powers in the 2002 Enterprise Act to block the deal if it is 'not in the public interest'

The peer, who served during her premiership as Conservative chairman, said the move was ‘against our national interest’ and designed to tie us into the European project.

Despite assurances from the London Stock Exchange and Deutsche, there are fears that business and jobs could eventually move from London to Frankfurt – particularly if the British public votes to leave the EU.

Meanwhile, LSE and Deutsche bosses themselves are busy shoring up their position so a takeover can go ahead even if Britain votes to leave the EU.

They have formed a six-person referendum committee which will meet at least once every three months to form a plan of attack.

This is chaired by Boerse chairman Joachim Faber. It has three Frankfurt and three London members.

In a statement setting out the takeover proposals, bosses said the new company would be ‘well-positioned to serve global customers irrespective of the outcome of the vote’, although it ‘might well affect the volume or nature of the business carried out’.

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