UPDATE 1-Euroclear to open talks with regulators over future share structure

* Full year dividend up 50%

* Talks with regulators over shareholdings to start (Recasts with investor conference)

By Huw Jones

LONDON, Feb 18 (Reuters) – Securities settlement house Euroclear said on Tuesday it would hold talks with its regulators about making it easier to buy and sell its shares, a key demand of some of its investors.

Euroclear, which unveiled a record net profit of 431 million euros ($467 million) in 2019, up 34% on the prior year, said the board had concluded its review in December on improving liquidity in its privately held shares, without giving details.

The Brussels-based company hired Goldman Sachs investment bank last year to advise on options as consolidation in market infrastructure steps up pace, with the Swiss Exchange making a bid for the Madrid bourse.

“The next priority now is for Euroclear to launch a regulatory consultation,” chairman Marc Antoine Autheman told investors.

Given Euroclear’s importance to Europe’s financial system, regulators would want to examine carefully any changes the company proposes.

This will involve talks with Euroclear’s main regulator in Belgium and with regulators that oversee subsidiaries elsewhere, Euroclear Chief Executive Lieve Mostrey said.

Top shareholders, including Euronext, the London Stock Exchange and ICE, own just over half of the company. But there is a long tail of over 100 shareholders that own fractions of 1% and want a more efficient way of cashing in.

Euroclear has already ruled out a merger and was looking at a listing, as well as a mechanism for placing shares with major investors.

Mostrey declined to say whether both options were still on the table, saying discretion was the best policy ahead of talks with regulators.

“We will discuss this as soon as it’s the right moment to talk further about them,” she said.

Euroclear had been due to give an update at the end of last year and on Tuesday Mostrey declined to comment on “speculation” on disagreements between its shareholders.

Euroclear, which settles stock trades for the London Stock Exchange, Euronext and other exchanges, said it would pay a full year dividend of 82.4 euros per share, up by 50% on 2018.

The company is a cornerstone of Europe’s financial infrastructure, ensuring the completion of securities transactions worth 837 trillion euros last year.

It looked after 30.1 trillion euros of assets in 2019, about half the European settlement market.

Settlement refers to the final leg of a transaction whereby legal ownership and safekeeping of a stock is exchanged for cash.

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