Barclays' chairman leaves door open to a merger

Shares in Barclays Bank climbed almost 3 per cent yesterday after its chairman indicated the group was open to a merger with a rival.

Speaking at a tense annual meeting, Andrew Buxton, the outgoing chairman, said: "If something arose that was consistent with Barclays' own group strategy and good for shareholder value, of course we would consider it." However, he declined to comment directly on recent speculation about a tie-up between Barclays and Royal Bank of Scotland.

Barclays' shares rose 54p to close at 1,933p, with traders also cheered by a bullish statement. "Our business has performed well in the first quarter," Mr Buxton told shareholders.

Despite the upbeat tone of the statement, the Barclays chairman faced some hostile questioning. There was particular concern about the size of the compensation package paid to Martin Taylor, who unexpectedly resigned as Barclays' chief executive at the end of last year.

Mr Buxton took the unusual step of asking Peter Jarvis, chairman of Barclays' remuneration committee, to give shareholders a short presentation explaining Mr Taylor's payout. Mr Jarvis said the package reflected "contractual obligations as well as the success of the business under Martin".

Separate remarks by Peter Ellwood, chief executive of Lloyds TSB, fanned merger speculation in the sector.

Mr Ellwood, speaking at The Economist's UK Financial Services conference, said: "Obviously we would like to buy in the UK, but a really big deal would go against competition rules. Europe is on our doorstep and we are looking pretty hard. We are also looking in the US."