Finance Watch -- WSJ

EXCHANGES

Deutsche Börse, LSE Face Antitrust Probe

The European Union's antitrust regulator opened an investigation Wednesday into the proposed merger of Deutsche Börse AG and London Stock Exchange Group PLC, citing concerns that the deal could reduce competition in several financial markets.

The European Commission said the merger could affect clearing functions, derivatives, repurchasing agreements, German stocks and exchange-traded products and that it would create by far the largest European-exchange operator.

"Financial markets provide an essential function for the European economy. We must ensure that market participants continue to have access to financial-market infrastructure on competitive terms," EU antitrust chief Margrethe Vestager said.

The LSE said it would try to head off some concerns by exploring the sale of its clearing unit, LCH SA. It said any sale of the unit would be subject to the merger with Deutsche Börse going ahead.

The commission said it was concerned the combination of both companies' clearinghouses could hurt competing trading platforms that depend on LSE's clearinghouse. It would establish the largest collateral pool in the world, at around EUR150 billion ($168 billion), used to guard against risk when clearing transactions, the EU noted.

--Natalia Drozdiak

IPO MARKET

Chinese Postal Bank Starts Off Slowly

The world's biggest initial public offering this year limped out of the starting gate, closing slightly higher with help from the Goldman Sachs Group Inc. traders tapped to support its shares.

Shares in Postal Savings Bank of China Co. rose 0.2% to 4.77 Hong Kong dollars (62 U.S. cents), as investors showed little enthusiasm for China's sixth-biggest lender after it raised $7.4 billion in the IPO.

Traders at Goldman Sachs bid for shares as others looked to sell. The Wall Street bank had been tapped as the stabilization agent, meaning it was responsible for a smooth first day of trading in Postal Savings Bank's shares.

--Alec Macfarlane, Ese Erheriene

DEUTSCHE BANK

Abbey Life Unit Sold for $1.2 Billion

Deutsche Bank AG sold its U.K.-based Abbey Life insurance unit to Phoenix Group Holdings Ltd. for $1.2 billion, boosting the German lender's capital cushion slightly amid intense focus on its financial health.

The deal will result in a pretax loss of roughly $897 million for Deutsche Bank from goodwill and other write-downs, but the bank said overall the sale would add 0.1 percentage point to a closely watched capital measure, its common equity Tier 1 capital ratio. That ratio stood at 10.8% at midyear.

The capital-ratio improvement stems from newly toughened regulatory requirements that have dogged Deutsche Bank and other European lenders. Abbey Life's business -- which includes managing annuities and derivatives based on anticipated life expectancy -- is risky under capital rules. Therefore, even though Deutsche Bank is taking a loss getting Abbey Life off its balance sheet, the sale reduces the bank's risk-weighted assets and improves its vital capital ratio.

--Jenny Strasburg, Andrea Thomas

(END) Dow Jones Newswires

September 29, 2016 02:47 ET (06:47 GMT)

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