City blasts ‘utter madness’ as Barclays linked to StanChart

M&A: Barclays has reportedly been exploring a tie-up with international banks such as Standard Chartered: General generic barclays bank File photo dated 05/02/13 of a general view of a branch of Barclays bank. The bank has announced that its total bonus pool for 2013 rose to £2.38 billion from £2.17 billion for 2012, including a £1.57 billion payout for its i

A sense of chaos engulfed Barclays on Wednesday after it emerged that chairman John McFarlane has tentatively explored a merger with Standard Chartered and potentially several other banks.

That would appear to undermine direct the strategy put in place by chief executive Jes Staley, who has been working on making Barclays a simpler bank, focused on being a UK High Street giant, and a player in London and New York.

Standard Chartered is Asia-focused, a market Barclays is pointedly avoiding.While the talks are unlikely to lead to a deal, they put fresh pressure on Staley, still recovering from a whistleblowing scandal that saw him penalised by watchdogs.

Barclays is also fending off activist investor Ed Bramson, who has a 5% stake and wants the bank to scrap its investment banking arm. About half of Standard revenues are from corporate and investment banking.

One City analyst described the idea of a merger as making “no sense whatsoever” and “utter madness”.

McFarlane, a guitar-playing feng shui aficionado dubbed Johnny Cash by former colleagues at Aussie bank ANZ, is regarded as an unusually colourful character for the chairman of a major bank. He worked for Standard Chartered earlier in his career.

The Financial Times reported that McFarlane’s plan has the backing of Sir Gerry Grimstone, who chairs Barclays’ international arm. “Hypothetical combinations” with Deutsche Bank, Credit Suisse and Singapore’s DBS Bank have also been discussed.

Ian Gordon at Investec said: “Given Standard’s business mix, the suggested rationale, as a response to Barclays’ activist interest, makes absolutely no sense to us.”

John Cronin at Goodbody said: “We would be sceptical of any potential transaction emerging.” But StanChart shares rose almost 2% to 780p.

The FT said McFarlane would be keen to make Standard boss Bill Winters the chief executive of a combined group, potentially undermining Staley. He has been telling investors Barclays is well on the way to being a clean, successful bank, having settled a US investigation into mortgage bond mis-selling and sold off its African arm.

City analysts say there is “little obvious strategic fit” between the two, and suggest regulators would be opposed to a high risk deal spanning numerous countries. Barclays and Standard Chartered declined to comment.