Varley fuels talk of US takeover by Barclays

Published on Wednesday 10 March 2010 20:32

SHARES in Barclays edged higher yesterday despite speculation that the group is looking to buy a retail bank in the US to build on its successful investment banking business stateside.

Barclays declined to comment on reports that it had designated an internal team to assess possible targets and was looking for a franchise with a strong branch network and deposit base.

The speculation was fuelled by mixed signals on retail banking growth strategy given by group chief executive John Varley at the bank's annual results meeting.

Varley said he wanted to increase the ratio of non-UK to UK retail banking business, but "with the emphasis on creating critical mass in markets where we have a greater presence".

Barclays has no retail ranch banking business in America, but a strong investment banking arm boosted by the acquisition of Lehman Brothers' US operation amid the financial crash.

The UK bank is not believed to be in discussions with any US retail peer about a takeover.

Mike Trippitt, analyst at Oriel Securities, said: "It would make sense, and if they do, it would make sense to do it in size. If ever there was a time to do it, this would be it."

City analysts said potential takeover targets in the US banking industry could include Fifth Third Bancorp, PNC Financial and SunTrust Banks.

They said a sizeable deal would probably require a capital raising, however, and this was partly behind an early Barclays share price fall yesterday. The stock later closed up 2.05p at 347.85p.