Euroclear and Euronext are pleased to announce that they have signed a Letter of Intent pertaining to the full acquisition by Euroclear of CIK, the central securities depository of Belgium that is currently a wholly owned subsidiary of Euronext.
The development represents another important milestone in the ongoing process of consolidating and rationalising Europe's post-trade processing infrastructure. It is envisaged that the transaction, which will be subject to the completion of satisfactory due diligence by Euroclear and to the relevant approvals and consents, will be completed during the first half of 2005.
Under the terms of the agreement, Euroclear and Euronext would enter into a sale agreement for CIK's shares in their entirety, and, as a result, all of its activities. In the context of the proposed restructuring of the Euroclear group, which is due to be implemented by early 2005, CIK would become a fully owned subsidiary of the new Euroclear holding company, Euroclear SA.
The new accord builds on a July 2001 agreement between the parties that provided for the transfer to Euroclear of CIK's book-entry settlement and custody business only. Under the terms of the new arrangement, both the book-entry business and the physical securities activity of CIK – including the newly launched 'Printing on Demand' service, SICAV settlement and nominative register management, among others – would be consolidated in Euroclear.
Completion of the transaction means that Belgian clients will be able to benefit from a single entry-point for all of their settlement activity, physical as well as immobilised. Among the key drivers behind the decision to broaden the 2001 arrangement were Euroclear's adoption of a new business model in July 2002, and its July 2004 decision to accelerate settlement-platform consolidation for the Euronext markets.
Commenting on today's announcement, Pierre Francotte, Chief Executive Officer, Euroclear Bank, said: "The integration of CIK is an important step that will enable us to further enhance our service offering in the Belgian market. It will also give our Belgian clients the opportunity to accrue maximum benefit from the consolidated settlement and custody platform that we are committed to delivering to Euronext market users by 2007."
Jean-François Théodore, Chairman of the Managing Board and Chief Executive Officer of Euronext, added: "The acquisition by Euroclear of CIK will facilitate the completion of Euronext's business model, leading ultimately to a single order book across the Euronext markets. It will also further ease cross-border trading and provide a natural environment for CIK to continue developing other services for its clients."