The new combination proposes to cut cross-border settlement costs in Belgian, Dutch, French, Irish, and UK securities by more than 90%, while also moving to harmonize market standards, the two agencies said.
The new group will settle more than 60% of Europe’s 300 biggest stocks, 52% of domestic bonds in Europe, and 62% of Eurobonds held by common depositories.
While described as a merger of equals, when the dust settles, Euroclear would seem to be effectively taking over its smaller UK peer, which will have 19% of the combined group that will take the Euroclear name, according to Dow Jones. The merger is expected to become effective in September, following votes by their respective shareholders next month.
Last year Euroclear, based in Brussels and Paris, and London-based CrestCo settled 120 million transactions with a total value of more than £140 trillion. They held more than £6.6 trillion worth of assets in custody at the end of the year.
The new group retains the mutual structure of the merging entities, user-owned and user-governed.
Chris Tupker will remain chairman of Euroclear and Euroclear Bank, while Nigel Wicks, currently chairman of CrestCo, will become deputy chairman of Euroclear and Euroclear Bank. Hugh Simpson will continue as chief executive of CrestCo and will become an executive director of Euroclear Bank.
By early 2005, the combined Euroclear expects to deliver a Single Settlement Engine, allowing customers to work with a single securities account for all securities serviced by the new entity. By 2008, plans are for customers to be able to access all Group Securities through one securities account, with one interface, one payment relationship, and a choice of service levels and tariffs.
Euroclear, which has been in competition with arch-rival Clearstream, is now well ahead in terms of both size and market clout, according to Reuters. Clearstream is now fully owned by Deutsche Boerse.
And that might not be the end of it. Euroclear chairman Chris Tupker told Reuters that “fruitful discussions” were being held with other national settlement systems in Europe and that some were likely to join Euroclear.
More information at Euroclear-CREST Alliance Confirmed