London Stock Exchange to cut 250 jobs, drops margin target

London Stock Exchange Group announced a round of job cuts on Friday after posting in-line results under its new boss, former Goldman Sachs veteran David Schwimmer

  
Image used for illustrative purposes. A worker shelters from the rain under a Union Flag umbrella as he passes the London Stock Exchange in London, Britain, October 1, 2008.

Image used for illustrative purposes. A worker shelters from the rain under a Union Flag umbrella as he passes the London Stock Exchange in London, Britain, October 1, 2008.

REUTERS/Toby Melville

LONDON  - London Stock Exchange Group Plc announced a round of job cuts on Friday after posting in-line results under its new boss, former Goldman Sachs veteran David Schwimmer, as the bourse readies for Brexit.

Schwimmer, who took charge last August, said businesses, including those perceived to be most exposed to Britain's impending exit from the European Union on March 29 such as clearing, continue to perform well, with no change in market position.

"We are very well prepared for whatever comes from a Brexit situation," Schwimmer told reporters.

"We expect international growth opportunities to offset any market headwinds in 2019."

The LSE's pan-European share trading platform Turquoise has applied for a licence to open a hub in Amsterdam to serve EU customers after Brexit, and Schwimmer said authorisation from Dutch regulators was imminent.

But if Britain secures a transition deal with the EU, share trading of euro denominated stocks would remain in London, Schwimmer said.

The exchange said it would cut 250 staff in 2019 to generate 30 million pounds in annual savings, but that it would not meet its target of core earnings margin of about 55 percent in 2019 as it spends on the business.

Schwimmer said the cuts would come from across its operations and focus on cutting duplication.

The LSE said its adjusted operating profit rose 15 percent to 931 million pounds ($1.23 billion) in 2018 while total income rose 9 percent to 2.14 billion pounds.

Analysts had expected adjusted operating profit of 932 million pounds, with total income of 2.13 billion pounds according to company supplied estimates from 14 analysts.

UNHAPPY M&A HISTORY

Schwimmer's predecessor Xavier Rolet left after a proposed merger with Deutsche Boerse was blocked by competition regulators.

Schwimmer signalled no rush to look for mega deals.

"We are very happy about the strategic positioning of the group. M&A will continue to be a tool in the toolkit. We are focused on finding things that make strategic sense," he said.

Shares in LSE fell 1.3 percent in initial trading before recovering to trade 0.2 percent higher at 4,516 pence by 0840 GMT.

RBC Capital Markets cut its share price target to 5,000 pence from 5,100 pence, saying it reflected a slightly more cautious capital markets outlook and higher expected investment spending.

LSE's post trade services unit, which includes clearing, settlement and custody activities, reported a 13 percent rise in revenue from LCH, the clearing house.

LSE's LCH dominates euro swaps clearing. Europe's financial markets regulator has given UK-based derivatives clearing houses permission to continue serving EU clients in the event of a no-deal Brexit - a major boost to London's battle to remain the central market for euro clearing.

Schwimmer said he had seen no discernible moves by customers from LCH to rivals such as Deutsche Boerse in Frankfurt. ($1 = 0.7545 pounds)

(Noor Zainab Hussain contributed reporting from Bengaluru Editing by Keith Weir) ((noor.hussain@thomsonreuters.com; Within UK +44 20 7542 1810; Outside UK +91 80 6749 2764; Reuters Messaging: noor.hussain.thomsonreuters.com@reuters.net))


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