The owner of the New York Stock Exchange (NYSE) is in advanced talks to buy a stake in Euroclear, giving it a say in the future of one of the world’s most valuable financial markets settlement platforms.
Sky News has learnt that InterContinental Exchange (ICE) is close to a deal to buy RBS’s 4% shareholding in Euroclear for a price estimated by analysts to be in the region of £200m.
A transaction could be announced as soon as this week, according to market sources.
If completed, the purchase of RBS’s Euroclear stake will be an intriguing development in an ongoing shake-up of the ownership of the Continent’s markets infrastructure.
Euroclear plays a central role in settling hundreds of trillions of euros-worth of trades each year across asset classes including shares and bonds.
RBS is one of about 130 shareholders in Euroclear, alongside the likes of Euronext, the European stock exchange operator.
Euronext was previously owned by ICE but was spun out as a separate company in 2014.
ICE’s acquisition of RBS’s stake in Euroclear will add the holding to its ownership of ICE Clear Europe, which settles about 4m contracts each day.
Euroclear has been identified by City analysts as an attractive takeover target for the London Stock Exchange Group, which announced last week that Xavier Rolet, its long-serving chief executive, would step down in 2018.
For RBS, which remains more than 70%-owned by British taxpayers nearly a decade after it was bailed out, the sale of its Euroclear shares will be a welcome step in the protracted clean-up of its balance sheet.
The deal will not, however, be material for the bank, which is due to report third-quarter results this week.
Executives within RBS’s Capital Resolution unit, the division which has been responsible since 2014 for dealing with £28bn of legacy assets, are overseeing the sale.
The sale to ICE will be the latest in a lengthy tail of assets disposed of by the bank since it was rescued by taxpayers in 2008.
RBS was forced to dispose of Worldpay, the payments processing business, for what critics have since dubbed a bargain basement price.
Its US bank, Citizens, a stake in Bank of China and a big commodities trading operation are also among the profitable assets it was obliged to offload, either for state aid reasons or because its parlous finances required it.
The disposal of RBS’s Euroclear stake comes at a crucial time for financial markets groups, with technologies such as blockchain presenting both threats and opportunities to established infrastructure players.
Euroclear was established in the late 1960s to settle securities transactions in a timely and cost-effective manner.
It has since become an entrenched part of financial markets infrastructure, announcing in July that it had processed €369tn during the first half of the year.
Euroclear benefited from increased market volatility during the second half of 2016, driven largely by the Brexit vote and the outcome of the US presidential election.
However, it warned in its 2016 annual report that Brexit would create “uncertainty for the Irish marketplace, which we service through Euroclear UK and Ireland”.
RBS and Euroclear both declined to comment, while ICE could not be reached on Sunday evening.
Source: Sky News