The London Stock Exchange’s merger with Deutsche Boerse is coming under fire in Germany, with politicians and industry veterans speaking out against the deal amid fears that Frankfurt’s status as a financial hub will be eroded. As both exchanges canvass investors about their £21bn merger, the decision to move the combined group’s headquarters to London while giving the German bourse’s chief executive, Car­sten Kengeter, the top job has been criticised. Manfred Zaß, a former Deutsche Boerse director, has warned that the compromises contained within the “merger of equals” could damage Frankfurt’s standing, despite Mr Kengeter’s claims that the deal would safeguard the city while enabling both the UK and Germany to compete in global markets. Mr Zass, who left the bourse after its failed bid to buy the LSE in 2005, told a German magazine: “We should not be naïve… With respect, if you know the push and pull behind such a merger, it sounds more like an investment banker fairy story. "The supposed parity – the boss here, the domicile there – creates a recognisably lopsided Frankfurt," he told a German magazine. Deutsche Boerse’s home district is also lobbying to retain the exchange’s head offices. Ulrich Caspar, who sits in the regional parliament in Hesse, has said he harbours concerns about the majority of the enlarged group’s shareholder base coming from English-speaking countries.  “It is the task of the German, Hesse and Frankfurter politicians to ensure that the stock market can continue to develop,” he told the German media.  Mr Caspar was a vocal opponent of Deutsche Boerse’s ultimately unsuccessful plans to merge with NYSE in 2012, part of a global wave of consolidation among financial market operators. Wilhelm Speckhardt, former mayor of the Frankfurt suburb of Eschborn, has described the plan to shift the holding company to London as “an unimaginable catastrophe for the town”.

It will take months to reopen Brussels airport fully, its CEO has warned, as staff return to the site a week after it was targeted by Islamist bombers. Arnaud Feist said the building will have to be rebuilt "from the air conditioning to the check-in desks".  The airport said later it would remain closed on Wednesday, dashing hopes it would resume partial services.  Thirty-two people were killed and 96 more are still in hospital after bombs targeted the airport and a metro train.  EU institutions reopened on Tuesday, amid beefed-up security measures. Increased searches on bags and vehicles are being introduced at the European Parliament while many events organised by non-EU bodies have been suspended.  Some 800 airport workers were asked to return to work on Monday to test provisional arrangements involving a temporary check-in area. Enhanced security measures are being introduced in the temporary building and further screening of baggage will take place before passengers reach the departure lounge.

FOR a brief moment at the turn of the year, Angela Merkel seemed to have recaptured control of Germany’s careering debate over refugees. The chancellor’s traditional New Year’s Eve address was acclaimed for striking just the right note. For the first time ever it was broadcast with subtitles, in Arabic and English, so that refugees as well as Germans would get her message. Mrs Merkel reminded the 1.1m asylum-seekers who arrived in Germany in 2015 to respect German rules and traditions. She urged her German viewers not to let themselves be divided, and warned of “those who, with coldness or even hatred in their hearts, lay sole claim to be German and seek to exclude others”.  Yet even as Mrs Merkel was speaking, about a thousand men, described by police as mainly migrants of north African or Arab origin, began massing between Cologne’s railway station and cathedral, where fireworks were about to begin. Around midnight they broke into clusters and formed huddles around women who had turned out to celebrate. They then set upon the women, harassing and groping them, stripping them of clothing and valuables. One victim was raped. Of the more than 600 women who have since come forward, many described the ordeal as “running the gauntlet”.

The world’s leading oil producers, including non-OPEC members, are meeting on April 17 in Doha, Qatar to discuss the output freeze.  While Iran is seeking to increase production with the lifting of international sanctions, the deal may be successful even without Tehran, according to OPEC Secretary General Abdalla Salem el-Badri.  “I hope the result of the meeting will be positive. They [Iran] are not objecting to the meeting but they have some conditions for the production and maybe in the future they will join the group,” he said at a conference in Vienna on Monday.  “The price is going up; I hope this trend will continue… I don’t expect the price will go high but I think it will go to a moderate level,” el-Badri added.  According to el-Badri, while inventories are about 300 million barrels above the five-year average, prices will come back to normal, when the glut reduces.  He added it’s too early to discuss a production cut, as producers should deal first with the freeze. “Let us go to the freeze and see what will happen, then we will talk about any other steps in the future,” el-Badri said.  El-Badri’s words briefly bolstered oil prices, but the effect soon wore off. After the terrorist attacks in Brussels, Brent and US WTI benchmarks slightly lost momentum, trading at just over $41 per barrel.  Iranian Oil Minister Bijan Namdar Zanganeh has said Tehran will not join a production freeze until its output reaches four million barrels per day. Currently it stands at 2.8 million bpd.

The Bundesbank has announced plans to repatriate some of Germany’s gold reserves from abroad. At least half of the country’s gold would be transferred to Frankfurt by 2020, according to Bundesbank President Jens Weidmann.  Weidmann says 366 tons of gold worth €11.5 billion have been delivered to Frankfurt so far. “There are now about 1,400 tons or 41.5 percent of our gold reserves here,” the banker said.  In October last year Germany’s gold reserves stood to around 3,384 tonnes, worth about €120 billion, which is the second largest in the world after the US.  Weidmann added the rest of the gold will remain in New York and London, which he says are as safe as Germany. In case of emergency, these reserves would quickly be converted on the markets in these cities, the banker said.  The Bundesbank has been criticized at home for keeping a major part of Germany’s gold reserves abroad. Critics are demanding the complete return of the gold to the country. They regard the gold as insurance if a crisis comes, and the immediate physical availability would be the decisive criterion. When trying to move gold from New York in 2014, the Bundesbank met obstacles from US authorities when officials tried to inspect the German gold kept in US vaults.  “I’m no conspiracy theorist, but the Bundesbank should be able to audit the gold once a year like it does with reserves in Frankfurt,” Hans Olaf Henkel, a German member of the European Parliament, told RT.  Some even doubted the German gold is still physically there. “We are still missing … published lists of gold bar number, even though the US Federal reserve publishes this list for their own gold,” said Peter Boehringer, founder of the Repatriate our Gold Campaign.

The ECB is asking the great banks to review the risks of a potential Brexit     The European Central Bank (EC) has asked the major banks that it oversees to analyze the risks they would be faced with if Great Britain were to exit the European Union (Brexit), a source close to the situation quoted by Bloomberg says. According to the aforementioned source, the ECB is working individually with banks and it is also urging companies to be prepared for everything that could impact them, in the event of a Brexit. The governor of the Bank of England, Mark Carney recently warned that a potential exit of Great Britain from the EU would affect the country's financial City and would aggravate the threats to financial stability. Last week, Mark Carney said that if Great Britain were to leave the European Union, banks would probably move some of their businesses to the EU.  So far, some European banks, including "Deutsche Bank" AG (Germany) and "ING Groep" NV (Holland) have announced that they might move their employees from Great Britain if that country were to vote in favor of exiting the European block in the referendum scheduled for June 23rd. The British division of the biggest Spanish bank, "Banco Santander" SA, has informed, in its annual report concerning its financial results, that "it has evaluated the potential consequences of a potential British exit from the EU, and the potential impact of the market instability in the period before the referendum, respectively". At the end of last week, German publication Handelsblatt also wrote that lately, the possible consequences of a potential British exit would have on the financial markets and banks have been the main concern of the ECB.  Quoting a source from the ECB, the aforementioned newspaper notes: "The Brexit is the biggest threat to financial stability this year". (A.V.)

Another decision of the ECB shows that the concerns expressed at the level of the banking system, concerning the effects of negative interest rates on market profitability and liquidity, have been taken into account. The European Central Bank has also announced the launch of four new long-term refinancing operations (TLTRO II) with a four-year maturity and interest rates that "can reach the level of the interest rate for the deposit facility", starting with June 2016, as stated in the press release. The operations will be performed quarterly, and the last TLTRO operation will reach maturity in March 2021, according to statements by Mario Draghi. The amounts borrowed by banks as part of these operations depend on the amount of the loans in the portfolio, so as to allow the ECB to reach its goal, of boosting lending. That means that the ECB will pay banks to "refinance" over a long period of time, but the nature of the financial securities which will be accepted as collateral in the TLTRO II is not known. As part of the first refinancing operations only the securities with the highest rating have been accepted, but the conditions have been significantly eased over the last few years. Perhaps the prediction made by a German MP in 2012, who told Handelsblatt that "if the ECB keeps going that way, it will soon end up buying even old bicycles" will come true eventually.  In Mario Draghi's opinion, "the exhaustive package will exploit the synergies of the monetary policy instruments", and the accelerated rise of the European stock market indexes, along with the significant weakening of the Euro against the dollar seem to indicate the resurrection of investor confidence.  But how long will the exuberance of the synergies last when faced with reality? The rise of the stock exchanges petered out after a few minutes, and the Euro rose to 1.095 USD/EUR, from approximately 1.08 USD/EUR after the announcement of the monetary policy decision. During the press conference, the Euro rose even more, passing the level of 1.11 USD/EUR.  Mario Draghi once again mentioned the deflationary threat, as well as the need for structural reforms. In the press conference nobody asked whether the quantitative easing wasn't in fact the main hurdle to structural reforms.  As for the deflationary threat, Patrick Artus, the chief-economist of investment bank Natixis, recently wrote that "deflation represents a decline of the GFP deflator and not of the CPI". According to the definition found on the NBR website, the GDP deflator is "the index which measures the price variation of all the end-user goods and services created in an economy, over a specified period".