Clearstream Results Hit By Weak Equity Markets

Clearstream Results Hit By Weak Equity Markets The big difference between Euroclear, which reported last week ("Markets Boost Euroclear But Strategic Questions Are Unanswered"), and Clearstream is that the Luxembourg based ICSD has meaningful exposure to the equity markets via

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Clearstream Results Hit By Weak Equity Markets
The big difference between Euroclear, which reported last week (“Markets Boost Euroclear But Strategic Questions Are Unanswered”), and Clearstream is that the Luxembourg-based ICSD has meaningful exposure to the equity markets via Deutsche Borse Clearing. The Clearstream results, announced today, bear the scars. Revenues were down 4 percent to Euros 979.5 million, and pre-tax profits by 23 per cent to Euros 166.1 million.The wide margin between the declines in revenues and profits reflects in part the massive costs of conducting an investigation into allegations of money-laundering following the publication ofRevelation$ last year , and of paying off former president and CEO Andre Lussi (“Lussi Falls”, Global Custodian, Summer 2001). But what the ICSD calls “difficult conditions, especially in equity markets,” had much more to do with results which do not compare well – superficially, at least – with those of Euroclear. The key figures are:

Clearstream International

Year ended 31 December 2001

Euros millions

Gross Operating Income

979.5

Profit Before Tax and Exceptional items

195.0

Profit Before Tax

166.1

Net Profit

113.4

Distribution to shareholders

46.5


Consolidated Gross Operating Income reached Euros 979.5 million, a 4 percent decline on last year. Profit Before Tax and Exceptional Items totalled Euros 195.0 million. The exceptional items were due mainly to the legal costs of the investigation into money laundering, items relating to the new head office project and termination arrangements with the former CEO. The resulting profit on ordinary activities before taxes decreased by 23 percent to Euros 166.1 million.The number of transactions processed was 118.9 million and customer securities deposits marginally improved to Euros 7.46 trillion. Gross expenses increased by 1 per cent to Euros 813.4 million. Net profit for the year decreased by 10 per cent to Euros 113.4 million. Total consolidated shareholders’ equity was Euros 740.4 million. Clearstream International’s consolidated capital adequacy ratio as at 31 December 2001 was 436 per cent, well above the regulatory requirement (100 percent) and international standards.Commenting on the announcement, Andr Roelants, Chief Executive Officer, stated: “Once you take out the distortion of exceptional items, these figures show the core strength of our company even in difficult times. Our core businesses have shown good growth with deposits in debt instruments up and understandably, equities have not matched those figures. We have not reached our record levels of last year, but the financial performance remains very solid. As we look forward to building further synergies with Deutsche Brse, we understand that our customers want to see the provision of high quality, lowest cost services in a competitive environment. Clearstream is perfectly positioned to benefit from this and we look forward to a strong year in 2002.”

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