Barclays has reportedly ‘kicked around’ the idea of merging with Standard Chartered

Barclays chairman John McFarlane is said to have considered the deal.

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Barclays chairman John McFarlane is said to have considered the deal.
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REUTERS/Brendan McDermid

  • The Financial Times says Barclays’ board has considered a merger with Standard Chartered.
  • The possible deal is apparently one plan being considered to ward off the activist investor Edward Bramson, who has built a 5.4% stake in Barclays.
  • Neither side has issued statements to shareholders, suggesting no serious talks have taken place.

LONDON – Barclays has considered merging with Standard Chartered Bank, according to a report in the Financial Times.

The FT report on Wednesday cited sources close to the talks as saying senior board members at Barclays were considering a StanChart tie-up as one of various possible contingency plans to ward off an activist investor who has built a stake in the bank.

Barclays declined to comment. A representative for StanChart told Business Insider: “We are entirely focused 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, that no serious work had been done, and that Barclays’ directors had simply “kicked around” the idea.

Reuters on Wednesday morning reported that Barclays had “no plans” for any tie-up with a rival bank, citing two sources at the bank.

Barclays shares were up 0.18% after half an hour’s trade in London. Standard Chartered shares were up 3.20% at the same time.

Why Barclays would be scoping out Standard Chartered

Barclays CEO Jes Staley.

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Barclays CEO Jes Staley.
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REUTERS/Yuri Gripas

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 the activist investor Edward Bramson.

Bramson’s activist fund, Sherborne, has acquired a 5.4% state 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.

To head off any pressure from Bramson, the board is 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 reportedly include a straightforward return of capital to shareholders, an expansion of Barclays’ UK retail business, or even tie-ups with the likes of Credit Suisse or Deutsche Bank.

Would a StanChart deal make sense?

Standard Chartered

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REUTERS/Bobby Yip

Standard Chartered and Barclays are two very different banks.

The UK-headquartered Barclays is known for its retail, corporate, and investment-banking activity in the UK and the US.

Standard Chartered focuses on commercial and investment banking in Asia, Africa, and the Middle East.

Barclays is 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.”

You can read the FT’s full story on the potential deal here.