The City has questioned the rationale of any mega-merger between Barclays and FTSE 100 banking rival Standard Chartered, following speculation that Barclays was considering merger options.
Investors and analysts lined up to pour cold water on talk of a tie-up between the two lenders, after a report in the Financial Times suggested top Barclays bosses had “kicked around” possible merger ideas, leading to a private discussion between a director from each bank.
Barclays is under pressure to improve returns after Edward Bramson’s investment vehicle, Sherborne Investors, built up a more than 5pc stake in the bank ahead of a likely campaign for a shake-up to increase profits.
But the mooted deal got a frosty reception in the City. “We see absolutely no strategic logic or rationale behind such a transaction,” Edward Firth, analyst at Keefe, Bruyette & Woods, said.
Mr Firth said that if correct it was a “poor reflection on Barclays management that, when under pressure to deliver improved performance, rather than focusing on the ‘nuts and bolts’ of delivering incremental improvement, prefer to search for a ‘rabbit out of the hat’ solution”.
Ian Gordon, analyst at Investec, said the mooted merger seemed “farfetched” and “makes absolutely no sense to us”.
He said: “We struggle to see any material upside on a ‘standalone’ view, and do not see any obvious ‘strategic fit’ with Barclays.”
Martin Gilbert, co-chief executive of one of Standard Chartered’s biggest shareholders, Standard Life Aberdeen, told Bloomberg TV he would be “slightly surprised” if a deal happened after Barclays had sold their African division last year to raise capital.
But he added: “The sector needs to be larger, certainly against the very large US banks that dominate investment banking globally.”
Any tie-up would create a £60bn banking behemoth. The two lenders currently have limited geographical overlap as Barclays is focused on the UK and US, whereas Standard Chartered concentrates on emerging markets in Asia and Africa.
A source close to Barclays said the lender had not done any analysis on a potential deal with Standard Chartered. Barclays declined to comment.
Standard Chartered distanced itself from the report this morning, saying: “We are entirely focussed on executing our strategy, and do not comment on this type of speculation.”
Barclays shares closed down 1.1pc, while Standard Chartered finished up 0.4pc after jumping as high as 2.6pc in early trading.
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