LCH.Clearnet Group Ltd. named Suneel Bakhshi chief executive officer as the world’s largest interest-rate-swap clearinghouse, majority owned by London Stock Exchange Group Plc (LSE), seeks to cut costs and increase profit.
Bakhshi is currently President and CEO of Citigroup Global Markets Japan Inc., and will assume his new role early next year, subject to regulatory approval, LSE and LCH said today. In a 31-year career with the third-biggest U.S. bank, he has run European fixed income derivatives trading and been chief risk officer for the global commercial banking business.
“We are hopeful that Mr. Bakhshi’s appointment will lead to a new culture at LCH.Clearnet,” Peter Lenardos, an analyst at RBC Capital Markets, said in a note to investors. “Mr. Bakhshi’s task will be focusing LCH.Clearnet on capitalizing on growth opportunities and achieving a material increase in profit margins.”
Bakhshi, who has an MBA from Queen’s University in Canada, and a B.Com degree from Delhi University’s Shri Ram College of Commerce, will also join the executive board of LSE, the exchange said.
LSE now owns 57.8 percent of the London-based clearinghouse after completing the acquisition in May. Nasdaq OMX Group Inc. increased its stake in LCH to 5 percent from 3.7 percent as part of the deal, which valued LCH.Clearnet at 633 million euros ($866 million). LCH.Clearnet also operates SwapClear, the biggest clearing house for interest-rate swaps.
LCH.Clearnet has room to cut costs in technology and overlapping systems after LSE’s stake purchase, Chairman Jacques Aigrain said in September. The two also have areas of overlap where costs can be reduced, such as in support functions, Aigrain said, declining to be more specific. The “full benefits of integration will emerge over three years,” he said.
RBC’s Lenardos said the brokerage wanted to see LCH.Clearnet focus on “improving operating efficiency, IT rationalisation, capturing the benefit of OTC derivative clearing, and the renegotiation of profit-sharing agreements at SwapClear.”
Clearinghouses cut risk by collecting collateral to back each transaction, monitoring daily price moves and making traders put up more cash as losses occur. Traders have to deal through clearing members, who are typically the biggest banks and brokerages.
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