Is Barclays mulling a mega-merger? Unnamed sources slap down report of possible tie-up with rival bank Standard Chartered

  • Sources close to Barclays told Reuters there is no deal on the cards 
  • The Financial Times reported that a deal has been considered
  • One analyst said he saw 'no strategic logic or rationale' for a merger

By JANE DENTON FOR THISISMONEY

Updated:

Barclays is not in talks with Standard Chartered over a potential merger, two sources close to the former have told Reuters.

The unnamed sources throw cold water on a report by the Financial Times suggesting the pair of financial giantshad discussed a deal.

The Financial Times' sources said Barclays was considering the move after coming under pressure from activist investor Edward Bramson, who has, via his Sherborne Investors fund, recently become one of its biggest shareholders.

Barclays is not in talks with Standard Chartered over a potential merger, two sources close to the former have told Reuters

Barclays is not in talks with Standard Chartered over a potential merger, two sources close to the former have told Reuters

But, Reuters' sources said no deal was in the pipeline, adding that Barclays had no plans to combine its operations with any of its rivals.

Even before the 'deal, or no deal' debate had been brought to an end, analysts had already started questioning the logic of such a deal.

'We see absolutely no strategic logic or rationale behind such a transaction,' said Edward Firth, an analyst at KBW in London.

Barclays needs to improve performance at its investment bank, while Standard Chartered needs to generate more capital to capture growth opportunities in its markets of Asia, Africa and Middle East.

'Neither problem is solved by the other,' Firth said.

Illogical: 'We see absolutely no strategic logic or rationale behind such a transaction,' said Edward Firth, an analyst at KBW 

Illogical: 'We see absolutely no strategic logic or rationale behind such a transaction,' said Edward Firth, an analyst at KBW 

Shares in Barclays are down 0.89 per cent or 1.87p to 209.23p, while Standard Chartered's is up 1.70 per cent or 13.00p to 779.90p. 

Barclays is under pressure from Bramson's Sherborne Investors fund to axe the bulk of its trading activities in its investment bank, sources for Reuters said.

Bramson thinks ending trading across its investment banking operations would help Barclays cut costs and boost its returns, the sources said. 

In its report, the Financial Times said that while a private conversation between a director of each bank about the potential benefits of such a deal had taken place, no initial offer or formal bid had emerged. 

Shares in Barclays are down 0.89 per cent or 1.87p to 209.23p, while Standard Chartered's is up 1.70 per cent or 13.00p to 779.90p

Shares in Barclays are down 0.89 per cent or 1.87p to 209.23p, while Standard Chartered's is up 1.70 per cent or 13.00p to 779.90p

During the financial crisis of 2008, Barclays raised £11.8billion worth of emergency funds so it could avoid being bailed out by taxpayers.

In its last set of results for the first quarter, Barclays posted a statutory loss of £236million.

The bank took a £1.4billion hit from settling with the US Justice Department over the sale of toxic mortgage-backed securities in the run-up to the financial crisis.

Barclays said it had retained its plan to pay its shareholders a dividend of 6.5p per share for this year. 

Results: In its last set of results for the first quarter, Barclays posted a statutory loss of £236million

Results: In its last set of results for the first quarter, Barclays posted a statutory loss of £236million

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