LONDON — Barclays has considered the possibility of merging with Standard Chartered Bank, according to a report in the Financial Times.
The FT report on Wednesday sites sources close to the talks, saying senior board members at Barclays are considering a StanChart tie-up as part of a wide range of possible contingency plans to ward off an activist investor who has built a stake in the bank.
Barclays declined to comment. A spokesperson for StanChart told Business Insider: “We are entirely focussed on executing our strategy, and do not comment on this type of speculation.”
Neither bank has issued a statement to the market. Public listing rules mandate that companies must disclose significant talks if outed in the press, suggesting that Barclays has not made any serious approach. The FT report stressed that the idea was in the early stages, no serious work had been done, and Barclays’ directors had simply “kicked around” the idea.
Reuters on Wednesday morning reported that Barclays has “no plans” for any tie-up with a rival bank, citing two sources at the bank.
Barclays shares are up 0.18% after half an hour’s trade in London. Standard Chartered shares are up 3.20% at the same time.
Why Barclays is scoping out Standard Chartered
The FT says Barclays’ board members including chairman Sir John McFarlane are considering the merits of a merger with Standard Chartered in response to stake building by activist investor Edward Bramson.
Bramson’s activist fund Sherborne has acquired a 5.4% in the bank in recent months. Bramson is perhaps best known in the UK for waging an extended boardroom battle with Electra Private Equity several years ago.
Bramson almost never speaks publicly about his stake-building activities or his motivations but the FT reports that Barclays CEO Jes Staley has met with Bramson in New York. Bramson is said to want Barclays to return capital from its underperforming investment bank to shareholders.
In order to head off this potential pressure from Bramson, the board are therefore considering plans that could create value for investors. The StanChart tie-up is just one option on the table, according to the FT. Others include a straightforward return of capital to shareholders, expansion of Barclays’ UK retail business, or even potential tie-ups with the likes of Credit Suisse or Deutsche Bank.
Would a StanChart deal make sense?
Standard Chartered and Barclays are two very different banks.
UK-headquartered Barclays is known for its retail, corporate and investment banking activity in the UK and US.
Standard Chartered, meanwhile, focuses on commercial and investment banking in Asia, Africa, and the Middle East.
Barclays is in the process of withdrawing from its African banking operations, so in that sense the geographic footprint of the two banks would complement each other. But the FT quoted an unnamed finance professional as saying: “I’m not sure there are many synergies.”