Stock Exchange suffers as Frenchman takes reins

22nd May 2009, Comments 0 comments

New French chief executive Xavier Rolet said Europe's largest stock market would benefit from global financial turmoil.

London – The London Stock Exchange posted Wednesday a net annual loss, but new French chief executive Xavier Rolet said Europe's largest stock market would benefit from global financial turmoil.

The LSE reported a loss after tax totalling EUR 385 million pounds (GBP 338 million), hit by charges linked to its merger with Borsa Italiana, while Rolet replaced Dutchwoman Clara Furse in the top post.

The net loss, for the 12 months to the end of March, compared with net profit of 168.3 million pounds the previous year.

"These are clearly challenging and dynamic times for the financial services industry," Rolet told reporters after publication of the results.

"I am aware more than most that the market dislocation has impacted market participants and investors worldwide... but these changes will also create great opportunities for trusted exchange businesses such as our own."

The LSE also revealed on Wednesday that companies raised a record GBP 106 billion via equity issues in the group's markets in 2008-2009. That compared with just GBP 45 billion in the prior year.

"Being at the heart of the world's most international financial centre, we have international opportunities which, quite simply, other exchange businesses do not have," added Rolet.

"We have already seen our role in record capital raising over the past year as companies issued new equity to fund growth or repay debt."

Under Furse, the London Stock Exchange merged with Borsa Italiana in late 2007, cementing the LSE's position as Europe's biggest equity market.

The LSE reported a 17-percent rise in operating profit excluding one-off costs and said revenues jumped almost a quarter to 671.4 million pounds.

Furse told reporters: "This last year has been an extraordinary one for markets. A year ago we were experiencing a financial recession and there were hopes that it might not evolve into an economic recession.

"But today we are in the midst of the first global economic recession in over 60 years, which is likely to have serious political repercussions and carry high social costs.

"It is therefore not surprising that the fallout has affected our markets, and in so doing, our business performance.

She added: "Despite this, and the sharp downturn in the markets since October, we have produced a big underlying performance, assisted by our merger with Borsa Italiana which has diversified our business.

"Throughout the turmoil, our markets have not only remained open for business, but our central purpose of linking companies with those who can provide finance has been highlighted, as we facilitate vital equity funding."

In a bid to remain competitive, the LSE has attracted investment from Dubai and Qatar. Originally the two owned about half of the LSE though the stake has since been diluted to about a third following the tie-up with Borsa Italiana.

Furse, who steps down after eight years at the helm, ranks among a small band of women who have managed to lead a listed British company and was the LSE's first female chief executive.

Rolet, meanwhile, has spent the past 25 years working for a number of major financial institutions. He was a senior executive at Lehman Brothers' Europe division between 2000 and 2008, latterly heading up Lehman in France.

Lehman Brothers sought bankruptcy protection last September after frantic talks failed to find a buyer for the 600-billion-dollar Wall Street giant and the US government decided not to step in and save it.

The collapse of Lehman Brothers as a result of the credit crunch sparked chaos on financial markets across the world.

AFP / Expatica

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