Seifert pays the price for pan-European trading dream

The Deutsche Brse chairman, Rolf Breuer, will follow him out of the door at the end of this year on the tainted-by-association principle.

Swiss-born Seifert’s crime was that he was a serial offender in wanting to take over the London Stock Exchange, by hook or by crook, but never showed the deftness of judgment or flamboyance of nature to pull it off.

His first tilt was in the summer of 1998 when he and the then LSE chief executive, Gavin Casey, proposed a far-reaching "alliance" between Europe’s two leading exchanges. The idea was that Britain’s leading 100 stocks, Frankfurt’s 50 or so blue-chip companies and eventually up to 150 leading stocks from other European markets would be traded across national boundaries.

It failed through lack of grassroots support.

Two years later, Seifert and the then LSE chairman, Donald Cruickshank, proposed a more formal merger of the two exchanges to create a new entity, called iX.

That also failed, not just because of the ridiculous name but because the LSE’s smaller members, in particular, felt Frankfurt was easily getting the better of the deal and that it was, in fact, a takeover of London by the Germans.

Seifert would have been chief executive and Breuer would be deputy chairman, guaranteeing Frankfurt two of the top three positions.

There was also little detail about settlement and clearing - for many market professionals the crux of any logic for a merger of financial exchanges.

In addition, London traders could not be convinced that the Germans’ Xetra technology system, which was to be adopted by the merged exchange, was better than the LSE’s own SETS system.

Amid much embarrassment, iX was axed.

After Seifert then failed to produce any credible bid - but plenty of bid-approach waffle - late last year and early into this year, alienating DB’s shareholders by an arrogant attitude in the process, it really did look like he was going down for the third time. So it proved. Maybe the stars are just against any takeover of the LSE by Frankfurt.

It leaves Euronext, the Paris-to-Brussels bourse in prime position to try and circumvent the regulators.

Seifert must sigh ...

Pain from Spain

ANY banking executive will tell you the main cost savings in any takeover in the sector are not from painful job losses and branch closures, even though these garner the adverse headlines. The real money is saved from integrating differing technology systems, making them uniform and more efficient, with greater resulting buying efficiencies.

Then come the revenue synergies from cross-selling of products between the two merged banks.

In financial terms, only then comes the benefits from the decimation of what is clinically referred to in company statements as "human capital".

But people getting P45s, perhaps after decades of service to a business, still bring home the human cost of such mergers, and that is what happened afresh with Abbey yesterday.

Its new owner, Banco Santander of Spain, says it now believes it can make 4,000 people redundant, compared with the 3,000 announced at the time of the acquisition late last year.

An extra 1,000 jobs going from the payroll is an increase, therefore, of a third on the back-office "fat" that Banco Santander first judged they could take out of Abbey.

I don’t know about turning banking upside down, as Abbey’s former merchant banker chief executive, Luqman Arnold, said was his aim; a lot of people are having their working lives turned upside down as the axe falls.

However, yesterday’s Q1 results from the Spanish parent showed what the acquirer is getting out of the deal. Apart from the 150m of cost savings it is still estimating for 2005 from Abbey’s cost-base, the latter also contributed more than 100m to Santander’s Q1 profit. Its profits rose an impressive-looking 38 per cent in the period; but without Abbey’s contribution this would have been a useful, but not quite so impressive, 21 per cent.

There is no further detail at present on where the fresh Santander jobs-axe at its British subsidiary will fall, and so it can only generate new uncertainty for a workforce put through the ringer by various managements for the past five years or so.

It is a depressing tale for them, no matter what commercial logic lies behind the rescuing of the company from the red.