Not easy to spur bourse mergers to deepen EU capital market, says Euronext

By Thomson Reuters Feb 15, 2024 | 12:07 PM

By Huw Jones

LONDON (Reuters) – The “gap” between policymakers wanting bourse mergers to deepen EU capital markets, and the demands of private shareholders makes it hard to push through consolidation, Euronext said on Thursday.

Euro zone finance ministers want Brussels to assess, and potentially address, barriers to exchange mergers in a region with a plethora of trading platforms, a draft document on Thursday showed.

“We welcome any initiative that promotes consolidation of market infrastructure in Europe,” Euronext CEO Stephane Boujnah told Reuters.

Euronext marks 10 years as a listed company, the result of many bourse takeovers, but Boujnah said that currently there were “not many willing sellers” in the sector, and that Euronext is not a buyer at any price.

“There is a gap to be bridged in due course between the sort of vision of policymakers, which is a vision we share that consolidation makes Europe more relevant, and reality of ownership, strategy and platforms that create different dynamics,” he added.

Euronext’s “very preliminary” dialogue with Deutsche Boerse on a joint liquidity pool in stocks were paused due to “very fundamental capital market reasons”, and not because of regulatory issues that needed fixing, Boujnah said.

Boujnah suggested better channelling of savings into EU companies, and proceeding “promptly” towards single EU supervision for markets to end different national interpretations of EU rules that create barriers.

Finance ministers are considering both.

A prospectus for issuance that can be used cross-border would also help, he said, adding he was “optimistic” about Euronext’s IPOs pipeline.

“When you vaccinate your dog, and you cross the border with a pet you have a single vaccination certificate across Europe, but when you want to do an IPO, you don’t have a single prospectus,” Boujnah said.

Euronext on Thursday reported full year earnings for 2023, saying that good progress with integrating the Milan Exchange bought in 2021, with “run rate synergies” of 74 million euros ($79.62 million), ahead of its 70 million euro target.

Full-year revenue and income rose 3.9% to 1.47 billion euros, and the recommended dividend equal to half of reported net income, or 2.48 euros per share, is up 11.7% on 2022.

Euronext expects 2024 underlying expenses, excluding depreciation and amortisation, of around 625 million euros.

($1 = 0.9295 euros)

(Reporting by Huw Jones; editing by David Evans)