Barclays has been exploring a potential merger with rival banks including Standard Chartered, as part of wide-ranging contingency plans being weighed by senior board members following pressure from an activist investor, the Financial Times reported.
Chairman John McFarlane was at least theoretically keen on the idea of combining with Standard Chartered, and was supported by Deputy Chairman Gerry Grimstone, the FT reported, citing two unidentified people close to the situation. “Hypothetical combinations” with other lenders including Deutsche Bank, Credit Suisse Group, and DBS Group Holdings, have also been discussed by Barclays’s directors, the newspaper reported.
Barclays has come under increasing pressure since Edward Bramson’s Sherborne Investors revealed its 5.2 per cent stake in March. Jes Staley, the former JPMorgan Chase & Co executive who leads Barclays, has bet his reputation on boosting returns and overhauling the investment bank, which is still by far Barclays’s worst-performing division after years of restructuring.
A private conversation took place between a director at Barclays and Standard Chartered about the possible benefits of such a deal, though no bid approach had been made, one of the people said, according to the FT. There has been no formal discussion of the potential combination on the Barclays board, one of the people said.
Representatives for Standard Chartered in Singapore and Barclays in Hong Kong declined to comment when reached by Bloomberg. Standard Chartered shares surged in Hong Kong on Wednesday and were trading up about 4 per cent as of noon local time, set for the biggest gain in almost a year.
Meanwhile, Standard Chartered said it’s focused on its strategy and isn’t responding to “speculation” in a newspaper report that Barclays has been exploring a potential merger with the emerging markets lender.
Barclays hasn’t held discussions with Standard Chartered and the British bank isn’t actively pursuing a deal, according to a person familiar with the company’s thinking. “We are entirely focused on executing our strategy, and do not comment on this
type of speculation,” Standard Chartered said in an emailed statement following the report.
Barclays shares were little changed at 8:20 a.m. in London, while Standard Chartered traded up 1.8 percent.
The FT cited an unnamed person who knows Bramson as saying he’s likely to call for Barclays to return to shareholders much of the 25 billion pounds ($33.5 billion) of capital tied up in its corporate and investment banking division by shrinking the unit.
A potential takeover of Standard Chartered would bring together the transatlantic focus of Barclays in the U.K. and U.S. with Standard Chartered’s concentration on Asia, the Middle East and Africa.
It would mark a sharp reversal in Barclays chief Jes Staley’s public strategy for the bank, which has sold down its holdings in Africa under his tenure. Last month, Staley also reiterated a pledge to return an increasing amount of cash to shareholders through dividends and buybacks.