It will take a heroic effort to rescue the LSE merger

It was a smooth charm offensive but just 36 hours later his words looked a little fanciful as it emerged that Kengeter is being investigated for insider share dealing. Kengeter insists the share purchases in the run-up to the LSE merger being unveiled were wholly legitimate and part of a compensation package agreed with the board. 

The timing of the probe by German prosecutors from Deutsche Börse’s home state of Hesse looks strikingly unfortunate. With deal negotiations entering the final stage, this hand grenade looks likely to exact maximum damage to a tie-up that has been politically unpopular from the start. The following day, in comments totally unrelated to the inquiry of course, the regional government’s finance minster called for the combined company to be based in Frankfurt.

The decision to base the holding company in London has caused great alarm among German regulators who fear a loss of influence over a prized national champion, particularly to a country that will be outside the EU.

There has been much speculation that Deutsche Börse would calm national opposition with an alternative structure that would suit both sides – perhaps a dual holding structure or headquarters in a third jurisdiction – but speaking to Kengeter after his speech, there was a sense that this is not on the cards. Instead, if there is an olive branch, it is more likely to be in the form of guarantees for German jobs.

A pan-European tie-up of this scale was always going to require monumental diplomacy skills to pull off, especially after the Referendum. If Kengeter manages to pull it off after this latest setback, it will be a heroic feat.

No sign of Spencer slowing down

When Michael Spencer cashed in the majority of his stake in TP Icap last month just days after taking ownership of the shares, it was interpreted as a sign that the financier was preparing for a quick retirement.

Let’s face it, when you’re 61 years old, have a fortune estimated at £1.2bn, and have just offloaded the bulk of the empire you spent three decades assembling, most people would contemplate slowing down. And when your wine cellar is as well stocked with fine reds as Spencer’s, the temptation must be even stronger.

Not a chance. Spencer is gearing up to do it all again. Having sold the main “voice-broking” part – middlemen who act between investment banks in currency and debt trades – to rival Tullett Prebon for £1.3bn, he has been left with Icap’s electronic broking arm, renamed Nex.

As Spencer explained with typical enthusiasm at a private lunch last week, he plans to turn it into a giant financial “supermarket” that executes debt, currency, and hundreds of other over-the-counter financial derivatives trades. 

It means taking on the beasts of banking such as JP Morgan and Citigroup which have a tight grip on the market. Yet Spencer is convinced that this cosy club is crying out to be gatecrashed by a someone with a new approach. 

Using state-of-the-art technology Nex plans to provide a better service and greater choice, while undercutting rivals on price with the “pile ‘em high, sell ‘em cheap” approach first adopted by the grocery industry. Spencer thinks eventually the banks can slowly be disintermediated just as he did so successfully with Icap. 

It took 30 years to build that company from just a handful of traders with a bank of phones into one of the world’s largest financial brokerages but the majority of the growth came during a turbocharged decade between 1997 and 2007.

This time Spencer thinks it will take just five years to become a serious player. It’s a hugely ambitious undertaking but having done it once before, few would bet against him.