Barclays and Standard Chartered? Rarely has a mooted deal been so swiftly dismissed by City analysts.
The words “madness,” “mystifying,” and “farfetched” were found in most of the notes distributed by those whose job it is to keep a watchful eye on the sector.
And yet the idea exists, in some minds at least, else it wouldn't have found its way into the press. Barclays' (outgoing) chairman John McFarlane (formerly of Standard Chartered – make of that what you will) is understood to have looked at such a tie-up before, but with each bank facing its own set of problems it wasn't considered to be the right time. Is it now?
Barclays has resolved a number of legacy issues recently. It's ring-fenced its UK retail bank, dodged the Serious Fraud Office investigation into the Qatar deal, paid up its fines over mortgage selling and its chief executive, Jes Staley, has survived an investigation into his handling of a whistleblower. However, these developments should not be interpreted as clearing a path for a mega-merger. Far from it: Barclays should now focus squarely on defining exactly what it wants to be, and few people think the answer involves the kind of global ambition that a Standard Chartered tie-up would represent.
Let's not forget that Barclays has just finished extracting itself from Africa. Did it do so in order to join Standard Chartered's 'emerging markets' party? Probably not. Citing the African exit, Martin Gilbert of Standard Life Aberdeen, a major Standard Chartered shareholder, told Bloomberg he'd be “slightly surprised” if a deal was on the cards. This is probably Gilbert's Scottish understatement on display.
The question remains, why has the prospect of such a deal raised its head? The answer may have something to do with nervousness among Barclays top brass over Edward Bramson, the activist investor who has built up a 5 per cent stake in Barclays. He's currently waiting in the wings but most City observers expect his focus, when it emerges, to be on pushing for a retreat from investment banking – rather than backing a merger.
On the list of things that Staley has to deal with, Bramson is high up. We can now add to this list the people around him who are openly flirting with a deal that few think makes any sense.