October 9, 2018 / 9:43 AM / a month ago

RPT-German bond trade will function even in no-deal Brexit - German finance agency

(Repeats story to add slugline; no changes in text)

By Rene Wagner

BERLIN, Oct 9 (Reuters) - Trade in German government bonds will continue to function even if Great Britain leaves the European Union without a clear agreement, the managing director of the German Finance Agency, Tammo Diemer, told Reuters in an interview published on Tuesday.

“The banks and brokerages affected by Brexit are positioning themselves in a way allowing them to continue to trade in German federal securities without restrictions via new or existing subsidiaries inside the E.U.,” Diemer said.

The German Finance Agency is a state-owned service provider, ensuring Germany’s federal debt and borrowing management.

The Bund auction group, consisting of 36 banks, is preparing for a no-deal Brexit scenario at full stretch, Diemer said.

“Market partners currently based in Londong are doing their utmost to be as operational as today when it comes to German federal bond trading by the end of March 2019 at the latest”, Diemer said.

The volume of German federal gilt-edged securities traded in London amounts to trillions of euros a year as especially Asia-based clients go though the City to acquire German bonds.

A HSBC subsidiary in France was the fourth biggest taker of German federal bonds in the first half of 2018.

The finance agency chief also told Reuters that long-term bonds, running over 12, 15 or 50 years, were not planned for next year.

“As the Federal state is coping without any new debt in its budget since 2014, and as therefore no additional finance needs arose, the annual emission volume is guided by circulating old debts, which narrows the leeway for new products,” Diemer said.

Writing by Tassilo Hummel, Editing by Michael Nienaber

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