ABI fires warning to potential LSE bidders

THE Association of British Insurers today waded into the debate over the London Stock Exchange takeover battle by warning Deutsche Borse and Euronext that any transfer of its activities overseas would be a 'serious setback' to confidence in the UK regulatory regime.

In a warning that will be seen as another blow to DB's hopes of winning the £1.3bn auction, ABI head of investment affairs Peter Montagnon said that while he was aware of 'general commitments' made by both prospective bidders, they had to be met over the longer term.

He added: 'Our members consider any change in the regulatory arrangements which undermined their confidence in the market would quickly lead to a quest for alternative UK-based arrangements.'

The ABI is one of the most influential lobby groups in the UK. Its members' equity holdings amount to almost 20% of the market.

Montagnon's comments come less than a fortnight after Financial Services Authority chairman Callum McCarthy warned that a takeover by either DB or Euronext may result in it being unable to protect shareholders under the Takeover Code and investigate allegations of market abuse.

The FSA mooted the idea that the bidder take a full listing in London to reassure member companies that it would not move the exchange's functions overseas. DB has already ruled that out and is seen to be the more likely of the two to move certain operations back to Frankfurt.