Barclays explores merger options with Standard Chartered and other rival banks, report says

Barclays chairmain John McFarlane is said to be keen on the idea of a merger with Standard Chartered: PA

Barclays is reportedly looking into a potential merger with Standard Chartered or other rival banks, in response to pressure from an activist investor.

Edward Bramson of Sherborne Capital has built up a 5.4 per cent stake in Barclays and may pressure the board to slim down the bank’s underperforming corporate and investment banking division so it can hand back capital to shareholders, the Financial Times reported.

To head off this threat Barclays has drawn up contingency plans, including the Standard Chartered tie-up and “hypothetical combinations” with Deutsche Bank, Credit Suisse and Singaporean bank DBS, according to Barclays sources cited by the newspaper.

The sources said that Barclays chairman John McFarlane is keen on the idea of a merger with Standard Chartered, though a deal is not understood to have been formally discussed.

If it were to go ahead it would see UK-focused Barclays, which also has operations in the US, link up with Asia-focused Standard Chartered, which has a strong presence in both Africa and the Middle East.

Barclays sold most of its stake in its own African unit last year, effectively bringing to an end the bank’s 90-year presence in the region. Mr McFarlane was said to be unhappy with the sale.

Barclays group chief executive Jes Staley has passed a number of potentially damaging hurdles in recent weeks. On Tuesday, a court dismissed charges brought by the Serious Fraud Office against Barclays relating to raising capital in Qatar in 2008.

That came just weeks after the bank finally agreed a $2bn settlement with US authorities relating to the bank’s sales of residential mortgage-backed securities in the run-up to the financial crisis.

Mr Staley was handed a £642,430 fine by City regulators earlier this month after he tried to uncover a whistleblower in 2016.

Internationally focused British bank Standard Chartered grew profits by 20 per cent in the first quarter of 2018 to $1.26bn, as years of restructuring began to deliver results.

Revenues hit $3.9bn, up from $3.5bn, in the last three months of 2017 – Standard Chartered’s best performance since 2015, when group chief executive Bill Winters began a four-year turnaround plan.