It is understood that Martin Taylor, chief executive of Barclays, had dinner with Malcolm Williamson, his opposite number at Standard Chartered and an old friend of his, two weeks ago at the fashionable Chez Nico restaurant in west London.
The dinner was to discuss an unrelated banking topic, but at the end of the meal Mr Taylor remarked to Mr Williamson that if Standard was interested in doing a deal with anyone, it should bear Barclays in mind.
Mr Williamson promised to mention Mr Taylor's idea to his board. Neither bank has commented publicly on the dinner. When the story hit the dealing rooms last Friday, Standard's share price rose 45.5p to 764.5p.
The City rumour mill was further excited by talk that Tan Sri Khoo Teck Puat, the Malaysian millionaire, may be about to sell his 15 per cent stake in Standard which he bought in 1986 - as one of three "white knights" who helped to rebuff a bid from Lloyds Bank. It is understood that if Tan Sir Khoo does intend to sell, he has not informed Standard of his intention so far.
A spokeswoman for Barclays said yesterday that reports of talks with Standard were "market speculation. There's an awful lot of speculation in the banking sector at the moment. As a policy we don't comment on it".
A spokesman for Standard Chartered said: "We don't comment on market speculation. We're not in discussions with anyone."
Standard has become the subject of bid talk not least because its share price was savaged late last year by the Asian financial crisis. Ironically, that share dive helped to scare off Deutsche Bank, which had been considering a link with Standard. The crisis halved Standard's share price, which bottomed out at just over 540p this January.
Mr Taylor's comments at Barclays' results briefing last week were interpreted in the City as distancing the bank from earlier attempts to merge with NatWest. In particular, Mr Taylor said that he "expected consolidation in the banking sector internationally in the next few years", a remark which observers seized on as suggesting that a link with Standard may be on the cards.
Standard's market capitalisation stands at pounds 7.6bn, suggesting any bid would have to be for well over pounds 8bn, according to analysts.
Mr Williamson would be no stranger to Barclays, where he started his banking career.
Privately, Barclays is irritated at the City's perception that it has to do a deal, in some form or another, following its retreat from investment banking and the sale of most of BZW.
Mr Taylor's reputation as a brilliant industrialist took a hammering when NatWest Bank more or less publicly rebuffed bid talks with Barclays. The creation of Barclays Capital under Bob Diamond has failed to deflect criticisms that Barclays lacks a convincing new strategy.
The merger buzz has surfaced right in the middle of the bank results reporting season. HSBC is set to announce its results today, followed by NatWest Bank on Tuesday and Standard Chartered a day later. Abbey National, whose name has recently been linked with NatWest and Prudential, reports on Thursday.