by : Arash Massoudi in London

Europe’s hopes of building a unified capital market would be jeopardised by a so-called Brexit, but it would not derail a potential tie-up between Deutsche Börse and the London Stock Exchange.

The continent’s two biggest exchange operators revealed further details about the putative deal that would value the combined group at more than £20bn.

“This transaction would be expected to fully optimise and benefit from the potential of the Capital Markets Union project. It is recognised that a decision by the United Kingdom electorate to leave the European Union (a ‘Leave Decision’) would put that project at risk,” the two companies said in a statement on Friday.

They have created a Referendum Committee to consider and make non-binding recommendation in the event of a June 23 vote for the UK to exit the EU.

Both exchanges said that if the UK did vote to leave the EU the volume of trade in London and Frankfurt could be affected. However they stressed “the outcome of the referendum would not be a condition of the potential merger”.

The FT reported on Thursday that Deutsche Börse deliberately launched its bid for the London Stock Exchange Group amid the political uncertainty surrounding Britain’s “Brexit” vote to steal a march on US rivals, the CME Group and Intercontinental Exchange.

The two companies also confirmed that Xavier Rolet, chief executive of the LSE, would step down from his role after a seven-year run turning around the bourse’s fortunes. The new group would be run by Carsten Kengeter, the former banker who has headed up Deutsche Börse since June, who would also be a member of an equal-weighted board.

Donald Brydon, the LSE chairman, would hold the same role in a combined company, while Deutsche Börse’s chairman Joachim Faber would become deputy chairman. David Warren, the LSE chief financial officer, would keep the same role and receive a board seat.

“Xavier has been the architect of LSE’s considerable value creation and has offered to retire in order to ensure the successful creation of the new group,” Mr Brydon said, adding that the board had accepted his offer.

The two bourses said the new company would be domiciled in the UK and established as a PLC, boosting the City’s roleas Europe’s dominant financial centre. The new group would have operational headquarters in London and Frankfurt, and be dual-listed on the main stock market in both cities.

LSE and Deutsche Börse also made their first statements about potentially “substantial” cost cuts, which they said would come mainly from removing duplication of technology and operations. The two said they could see additional benefits from cross-selling products.

The companies stressed the balanced nature of an all-share “merger of equals”, that underscored the political sensitivities and regulatory scrutiny any deal would face.

Under the terms being discussed, Deutsche Börse would emerge with 54.4 per cent of the new entity and LSE investors would own the remainder.