Barclays-Standard Chartered merger rubbished by City analysts as "far-fetched"

Catherine Neilan
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"If I discovered they were in advanced discussions I would fall off my chair" (Source: Getty)

The City has rubbished suggestions that Barclays could merge with Asian-focused bank Standard Chartered, with analysts dubbing the idea “far-fetched”, saying shareholders would be “horrified”.

Barclays’ chairman John McFarlane has been tentatively exploring the move - which could create a £60bn sprawling giant - as the bank looks to fend off activist investor Ed Bramson, who is seeking to scrap its investment arm.

The merger would be at odds with chief executive Jes Staley’s strategy of focusing on the UK high street and pits the two executives against each other: according to the FT’s report, McFarlane is keen to bring StanChart boss Bill Winters in as chief executive of the combined group.

But City analysts poured scorn on the entire idea.

“If I discovered that they are in advanced discussions or anything of that nature I would fall off my chair,” Investec analyst Ian Gordon told City A.M. “Put simply, the numbers just don’t add up.”

The whole notion was “far-fetched” and Barclays shareholders would be “horrified” if cash were used on M&A instead of Staley’s muted share buybacks.

Michael Hewson, chief market analyst at CMC Markets, agreed the proposal was unlikely.

“It sounds like dinner table talk - two chief executives chewing the fat over a beer and a steak.

“I can see the synergies but in terms of capital requirements its a tall order, both banks are in the middle of restructuring programmes. There is not much in way of overlap but the extra capital they would have to raise makes any prospective deal difficult.”

Artjom Hatsaturjants, research analyst at Accendo Markets, said investors should treat it “sceptically”.

“As far as the rationale it makes sense to fend off some of the activist investor pressure, but whether this is the correct approach it is hard to say.”

A Barclays spokesperson said: “We don’t comment on speculation.”

A spokesperson for Standard Chartered said: “We are entirely focused on executing our strategy, and do not comment on this type of speculation.”

Barclays’ share price closed down 1.1 per cent - in line with the FTSE100 - while StanChart’s was up 0.44 per cent.

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