By Dow Jones Business News, February 20, 2013, 08:00:00 AM EDT
By Ulrike Dauer
FRANKFURT--Deutsche Boerse AG (DB1.XE) has set up a senior-level task force to explore opportunities in Asia, the
chief executive said Wednesday, complaining of regulatory obstacles and high operating costs in Europe.
Reto Francioni told the annual press conference that the priority in Asia is to grow the company's existing business,
with less emphasis on joint ventures and cooperation agreements.
A year ago the European Union blocked the German exchange operator from merging with NYSE Euronext ( NYX ) on
competition grounds. The tie-up would have created the world's largest stock exchange operator. Earlier this month, U.S.
antitrust authorities cleared the way for IntercontinentalExchange Inc.'s ( ICE ) planned takeover of NYSE Euronext.
Mr. Francioni said Deutsche Boerse doesn't have any immediate plans for mergers and acquisitions in Asia. But that
could change, he said.
Deutsche Boerse already has a cooperation agreement with Korea Exchange. The two firms signed an agreement in 2007 to
help each other in various ways, including by sharing information and exchanging staff.
Mr. Francioni citied several reasons for the shift eastward. Business and economic growth in Asia will remain dynamic
and the exchange's customers are active there, he said. He added that market changes are making it easier for foreigners
to do business in Asia.
"Growth is happening in Asia, period," Mr. Francioni said.
"If the renminbi floats freely five years from now, you've got to be there and if you aren't, you'll miss out."
By contrast, regulatory change in Europe, including plans for a financial transaction tax and limits on high-frequency
trade, will make business less profitable there, he said.
The group expects Asia to contribute more than EUR100 million ($134 million) to overall revenue over the next three to
In 2012, Asia contributed 4%-5% of the group's net revenue of EUR1.9 billion, said Chief Financial Officer Gregor
Deutsche Boerse also provided more detail on plans to cut costs by EUR70 million annually by 2016. The company plans
to cut jobs in Luxembourg and its offices in the town of Eschborn, near Frankfurt, mainly in administration and
information technology. This could involve ending contracts with consultants.
Some jobs will likely be transferred to the exchange's Prague site, but other areas can't be ruled out, Mr. Pottmeyer
said. He said he is confident the job cuts will be achieved without layoffs.
In Europe, measures such as early retirement, part-time work and attrition can be used to shed jobs. The exchange has
set aside between EUR90 million and EUR120 million for severance packages and other efforts to implement the cost cuts.
Write to Ulrike Dauer at email@example.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
Copyright (c) 2013 Dow Jones & Company, Inc.