Barclays Plc has been exploring a potential merger with rival banks including Standard Chartered Plc, 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.
A private conversation took place between a director at each bank 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. Meanhwile, Standard Chartered Plc said it’s focussed on its strategy and isn’t responding to “speculation” in a newspaper report that Barclays Plc has been exploring a potential merger with the emerging markets lender.
Standard Chartered shares surged in Hong Kong on Wednesday and were trading up about 4 percent as of noon local time, set for the biggest gain in almost a year.
The FT reported that the possible merger is one of many ideas being “kicked around” by Barclays after activist investor Edward Bramson emerged as one of the lender’s largest shareholders in March. The founder of Sherborne Investors is reportedly seeking more cuts to the trading arm of the investment bank.
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.
“Hypothetical combinations” with other banks have also been discussed by Barclays’s directors, including Deutsche Bank AG, Credit Suisse Group AG and DBS Group Holdings Ltd., the FT reported. A potential takeover of Standard Chartered would bring together the transatlantic focus of Barclays in the UK and US 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.