In a further sign of cost-cutting due to shareholder pressure, Deutsche Boerse is planning to move its staff, currently based in Frankfurt-Hausen, to the neighboring town of Eschborn, previously the centre of securities operations for Deutsche Bank.
This was decided by the executive board of Deutsche Boerse AG on 11 january 2008. A new building is to be built by summer 2010, which Deutsche Boerse will then rent. As early as the second quarter of 2008, around 1000 staff are to move temporarily to an existing building in Eschborn.
The move will mean a significant reduction in the company’s trade tax burden and in its building occupancy costs. The company’s registered office will remain in Frankfurt, as will the trading floor of the Frankfurt Stock Exchange, located in the Alte Boerse in Frankfurt city centre.
Deutsche Boerse anticipates that this move will lead to a further reduction in its tax rate. The relocation, along with the takeover of International Securities Exchange ISE and the effects of the corporate tax reform in Germany, are expected to result in a tax rate of between 25 and 27%in 2010.
The company expects to achieve a tax rate of under 30% already for 2008, compared with the previous estimate of 31 to 33%.
As a result, Deutsche Boerse will be able to achieve a significant improvement in future earnings despite the costs incurred particularly in connection with the relocations and the planning work for the new building.
“The reduction in the tax rate constitutes a further structural measure aimed at strengthening our international competitiveness. It is part of a strategy to improve our market position, which has already optimized our capital structure and improved our cost efficiency. This optimization goes hand in hand with the obvious advantages a new cutting-edge building can offer staff”, says Reto Francioni, CEO, Deutsche Boerse.
The lease agreement for the current office building in the Hausen district of Frankfurt, which Deutsche Boerse has occupied since 2000, will expire in 2010. Overall, the new building will lead to a reduction in building occupancy costs from 2010. The initial plans for the new building are already on the drawing board.
Deutsche Boerse Group has around 3000 staff worldwide, the majority of whom are based in Germany and Luxembourg. Other key locations are Chicago, London, New York and Zurich. The group also has representative offices in Hong Kong, Moscow, Paris, Singapore and Tokyo, and plans to open a representative office in Beijing.