April 13, 2018 / 1:37 PM / 7 days ago

Goldman's Schwimmer to steer London Stock Exchange through Brexit

LONDON (Reuters) - The London Stock Exchange (LSE.L) named Goldman Sachs’ veteran David Schwimmer as chief executive officer on Friday, with an initial challenge of helping the 300-year-old institution to navigate Brexit.

FILE PHOTO: The London Stock Exchange Group offices are seen in the City of London, Britain, December 29, 2017. REUTERS/Toby Melville/File Photo

Analysts expressed relief that the LSE had finally been able to find an external candidate after a boardroom battle involving activist hedge fund TCI led to the departure last November of CEO Xavier Rolet.

Schwimmer, a 49-year old New Yorker who has been with Goldman for 20 years and most recently served as global head of market structure and global head of metals and mining in investment banking, takes up the role at the start of August.

Schwimmer, who attended Harvard Law School and Yale University, will earn an annual salary of 775,000 pounds ($1.11 million), with a bonus of up to 225 percent of his salary, LSE said.

He will also get 1.05 million pounds in compensation in March next year for giving up his 2018 cash awards at Goldman.

Frenchman Rolet left after almost a decade at the helm, during which he transformed the company with a string of deals, lifting its market value to almost 14 billion pounds from less than 1 billion.

Schwimmer takes charge as Britain’s planned departure from the European Union in 2019 raises questions about the LSE’s strategy at the heart of Europe’s biggest financial centre.

Although the LSE owns the Milan Exchange and has clearing operations in Paris, it is unclear how much direct access financial firms in Britain will have to EU customers after Brexit.

Schwimmer will have to protect LSE’s dominance in euro clearing as rival Deutsche Boerse (DB1Gn.DE) in Frankfurt is already seeking to exploit uncertainty to build up business.

He will also lead the LSE’s efforts to woo oil giant Saudi Aramco IPO-ARMO.SE to London for what is expected to be the world’s largest initial public offering.

“David is a leader with great experience in the financial market infrastructure sector ... as well as capital markets experience in both developed and emerging markets,” LSE Chairman Donald Brydon said in a statement.

“He is well known for his robust intellect and partnership approach with clients and colleagues alike,” Brydon added.

Group CFO David Warren, who was acting CEO, will continue as the company’s finance boss.

    TAKEOVER TARGET?

    The LSE is seen in the market as a takeover target rather than a predator with rivals Intercontinental Exchange (ICE.N) and CME (CME.O) in the United States long seen as suitors, analysts said.

    “We think the appointment of Mr. Schwimmer, a former M&A banker, will allow LSE to continue to look for inorganic growth opportunities, in line with LSE’s strategy,” UBS analyst Michael Werner said in a note to clients.

    UBS sees no big change in the LSE’s focus on developing its suite of indexes and the LCH clearing unit.

    Hedge fund TCI, an LSE investor, predicted a 15 billion pound bid for the group from ICE and CME during an investor conference call earlier this year.

    Rolet’s exit triggered a fight between Brydon and TCI, whose attempt to push him out was eventually defeated at a shareholder meeting in December.

    Brydon has said he will not stand for re-election at the annual general meeting in 2019.

    Since TCI’s defeat, LSE shares have risen more than 14 percent as investors bet on a takeover approach after a planned tie-up with Deutsche Boerse collapsed. LSE shares were up marginally at 4240 pence at 1010 GMT.

    TCI holds a 5.18 percent stake in LSE, and its founder Chris Hohn, declined to comment on Friday when contacted by Reuters.

    Rolet was credited with turning LSE into a diversified exchange group by buying a controlling stake in LCH, one of the world’s biggest clearing houses, and expanding the bourse’s activities in stock indexes.

    Under Rolet’s leadership, LSE was unable to seal a merger with Deutsche Boerse, the third attempt at an Anglo-German tie up.

    “It hasn’t been an orthodox transition, but we’re pleased to see clear leadership being put in place,” said a top-20 investor in LSE.

    LSE emerged from what was a troubling 2017 with a 47 percent profit jump despite turgid markets.

    ($1 = 0.6999 pounds)

    Reporting by Noor Zainab Hussain in Bengaluru and Maiya Keidan in London, additional reporting by Simon Jessop; editing by Jason Neely/Keith Weir

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