February 28, 2020 / 7:28 AM / 3 months ago

UPDATE 2-London Stock Exchange on track to close Refinitiv deal as clearing jumps

* Interactive graphic tmsnrt.rs/37WGTOd on income growth (Adds more details, further CEO comment)

By Noor Zainab Hussain and Huw Jones

LONDON, Feb 28 (Reuters) - - The London Stock Exchange Group said on Friday it would complete its $27 billion takeover of analytics company Refinitiv on time this year as it reported a rise in annual income driven by a jump in clearing activity.

The exchange’s chief executive David Schwimmer also said it was too early to assess the impact of the coronavirus epidemic on its global business, although like many companies it has imposed travel restrictions on some staff.

Constructive “pre-notification” discussions with European Union competition regulators regarding the purchase of Refinitiv are underway, with Schwimmer saying he expects to submit a formal application in March for approval.

There was nothing unexpected in the amount of time it was taking to obtain regulatory approval and detailed planning on integrating the two companies was underway, he added.

“We remain on track to close the transaction in the second half of this year,” Schwimmer, the former Goldman Sachs veteran who took the reins at the LSE in 2018, said.

Refinitiv is 45%-owned by Thomson Reuters, which owns Reuters News.

Schwimmer said it was premature to speculate whether the LSE may need to sell off parts of the group, such as the Milan Exchange, to win approval from Brussels. Rival Euronext has said it would be interested in bidding for it if so.

“With respect to Borsa Italiana, it has been an integral part of the business... and there is no expectation or intention that any of that should change,” Schwimmer told reporters.

The exchange said total income from continuing operations rose 8% to 2.314 billion pounds ($3.01 billion) in the year ended Dec. 31, narrowly beating the 2.308 billion pounds expected by 13 analysts in a company supplied estimate. Total revenue also rose 8% to 2.07 billion pounds.

LSE shares were down 2.5% at 1003 GMT, but outperforming a 3.7% fall in the broader market on jitters about the impact of the coronavirus on the economy.

EURO CLEARING RESILENT

The exchange’s post trade services unit, which includes clearer LCH and settlement and custody activities, reported a 15% rise in revenue.

Growth at LCH comes as rival Eurex in Frankfurt says uncertainty over Britain’s exit from the European Union is helping it to attract more euro clearing from London.

LCH cleared swaps worth over a quadrillion dollars globally last year, though Schwimmer said he was aware there may be a “modest amount” of billions of euros moving to Frankfurt.

“We continue to see growth in volumes coming out of EU domiciled customers... and very strong market share in that business,” Schwimmer said.

LCH will need EU permission to continue serving customers in the bloc from next January and Schwimmer said he expects to obtain this on a temporary or permanent basis this year.

Talks on a broader UK-EU free trade deal start next week amid recriminations from both sides.

Schwimmer also said the exchange expects its listings link to the Shanghai exchange “to take a while to build” up activity but it was in discussions with a number of companies.

($1 = 0.7696 pounds)

Reporting by Noor Zainab Hussain in Bengaluru, editing by Huw Jones, Kirsten Donovan

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