Banking

Barclays Mulls Bank Deals Including With Standard Chartered

Barclays is looking at inking a merger deal with an international bank or banks, with Standard Chartered among the potential targets.

The Financial Times, citing two people close to the situation, reported that facing pressure from Sherborne, the activist investment fund owned by Edward Bramson, it has started talking to other banks about potential mergers as part of a wide-ranging effort to explore options. The move is in the wake of Sherborne recently acquiring a 5.4 percent stake in Barclays. The Financial Times reported that John McFarlane, the chairman of Barclays, liked the idea of a merger with Standard Chartered, an idea that was also backed by Sir Gerry Grimstone, the chair of the bank’s international unit. Talks between a director at each bank have already happened in which they discussed the potential deal’s benefits to both banks. “John [McFarlane] has a real affinity for Standard Chartered,” one of the sources told the FT. “It would be logical, but I’d be very surprised if anything came of it.”  One source said that both Barclays and Standard Chartered are required to have more capital by regulators because they are systemically important banks. That would make a merger between the two harder to pull off. “The capital impediment is quite difficult. It makes any deal really hard to do,” said an adviser. “Banks are still quite risk-averse as the scars from the crisis are still very deep.”

A deal with Standard Chartered is just one of many ideas Barclays is mulling because of the stake purchase by Bramson. Chief Executive of Barclays Jes Staley met with Bramson earlier in May and was told that Bramson is still finalizing his strategic proposal for the bank. Bramson is likely to call for Barclays to return £25bn of capital that is in the corporate and investment banking unit which has been underperforming for some time. Other banks Barclays is mulling a potential deal with include Deutsche Bank, Credit Suisse, and DBS, reported the FT, noting that no formal discussions about a deal have happened with the board of Barclays. Nor have there been any talks with the banks or any detailed work on the ideas. A Barclays insider told the paper that the bank is “scanning the horizon” as are all the other boards of banks, which do it on a regular basis.

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