Speculation has been mounting on the stockmarket about a possible mega billion pound takeover in the financial sector, however a new favourite has come to the fore, Barclays Bank. Speculation has been increasing for some time that the massive UK financial power house which is Barclays Bank may be on the shopping list of Bank Of America.
In what would be one of the biggest ever deals in the UK financial sector, there are rumours of a pending £60 billion offer early in the new year. The Barclays Bank share price has reacted to this speculation and risen to a high of approaching 750p. Despite denials that there has been contact between the two parties, the rumours will just not disappear.
While the recent sale of 2 million shares by outgoing Barclays Bank Chairman Matt Barrett seems to indicate that talks have not begun (otherwise Mr Barrett would not have been able to sell his shares), trading patterns seem to indicate that something is imminent. No matter how hard the authorities have tried to clamp down on insider trading, the market always knows the news before it is announced. A sudden increase in recent share trading volumes also seems to support the thought that something may be afoot fairly soon.
Many of the larger UK research houses such as Merrill Lynch have been quoted as supporting the rumoured move, which seems to fit with Bank Of AmericaÂ’s stated overseas expansion plans. While BarclaysÂ’ does have overseas exposure, this has been an area where UK banks have suffered, seeming not to understand the local characteristics of overseas markets.
While many of the general public will only associate the Banking operation with the company, they also run a very successful Corporate Finance division, Fund Management arm and also the well known credit car brand. It seems as though the American predators believe that they can squeeze more of a return out of the divisions, and build on their solid base.
There have also been other rumours in the market regarding Alliance and Leicester and Royal and Sun Alliance, and it seems that the UK financial sector may well be under attack from foreign predators looking to expand into the lucrative UK market. In a world where money talks, and investment returns are everything, the UK may be about to lose control of some of its major financial institutions in 2007.
