The London Stock Exchange has ended its six-month search for a new chief executive by appointing Goldman Sachs banker David Schwimmer to replace Xavier Rolet, who was pushed out in November.
Schwimmer, who advises exchanges as the head of Goldman’s market structure business in New York, will join in August after 20 years at the Wall Street firm. He will be paid £775,000 a year plus a bonus of up to £1.7m and will receive £1.05m to make up for not getting his 2018 bonus from the US investment bank.
The 49-year-old American’s first task will be to steady LSE after an unusually turbulent period for one of the City’s oldest and most prestigious institutions.
After Rolet’s departure was announced in October, TCI Fund Management, one of LSE’s biggest shareholders, called for his reinstatement and accused the board of forcing him out against the interests of investors. The dispute came to a head in late November when Rolet agreed to leave immediately and LSE said its chairman, Donald Brydon, would not stand for re-election after 2019.
Schwimmer’s appointment resolves LSE’s quest for a new chief executive less than two weeks before its annual general meeting on 24 April. With a new chief executive lined up, Brydon is likely to face an easier ride at the meeting. TCI declined to comment on the decision to hire Schwimmer.
The Yale and Harvard graduate will also have to defend LSE’s position as the world’s biggest clearing house for derivative transactions against competition from European exchanges. Germany’s Deutsche Börse is trying to lure the lucrative business away from London after the Brexit vote.
London Clearing House, which LSE controls, processes about three-quarters of the €1tn-a-day (£865bn) clearing market for derivatives, acting as a middleman between buyers and sellers of complex contracts.
Rolet warned in 2016 that thousands of City jobs were at risk if London lost responsibility for clearing contracts in euros after Brexit though he said there were very few exchanges that could handle the business.
Schwimmer, who is based in New York, spent his first seven years at Goldman advising exchanges and stockbrokers. He then worked as chief of staff to Goldman’s chief executive, Lloyd Blankfein, when Blankfein was the bank’s chief operating officer.
From 2006 to 2009 he jointly ran Goldman’s business in Russia before becoming head of metals and mining. Last year he combined that job with heading Goldman’s market structure business in a return to advising exchanges.
Brydon said: “David is a leader with great experience in the financial market infrastructure sector, which he has been closely involved in throughout his investment banking career, as well as capital markets experience in both developed and emerging markets. He is well known for his robust intellect and partnership approach with clients and colleagues alike.”
Schwimmer will be the second former Goldman banker to lead the LSE. Rolet spent 10 years at the bank before leaving in 1994. Mark Carney, the Bank of England’s governor, also worked at Goldman. Carney was drawn into LSE’s dispute with TCI when he said he was “mystified” by events at the exchange.
Schwimmer will take over from David Warren, who has run LSE as interim chief executive since Rolet’s departure. Warren will return to his job as LSE’s chief financial officer.
Michael Werner, an analyst at UBS, the Swiss bank, said Schwimmer’s appointment was good news for LSE because it clears up the leadership question and investors were hoping an outsider would take over. As a former merger and acquisitions banker, Schwimmer will be equipped to buy other companies, in line with its current strategy, he said.
On top of his salary and bonus, Schwimmer will get a cash allowance of 15% of his salary in lieu of pension and other benefits. He will be awarded shares worth three times his salary that will bear fruit if he achieves targets. He will also receive an undisclosed sum for moving from New York and a housing allowance.