Barclays chief predicts more bank deals
Tuesday 23 December 1997
Barclays, the UK bank, is to sell its Australian and New Zealand investment banking operations to ABN Amro, the Dutch bank, for A$177m (pounds 71m). It is also set to announce the sale of parts of BZW Asia to Credit Suisse First Boston (CSFB), the Swiss-American investment bank which yesterday received regulatory clearance for its proposed acquisition of parts of Barclays' European investment banking operations.
These disposals mark the end of the sale process instigated by Martin Taylor, chief executive of Barclays, two months ago. Mr Taylor yesterday expressed relief that the process was drawing to a close. "BZW had been a strategic puzzle for quite a long time", he admitted.
Mr Taylor reaffirmed his commitment to BZW's debt activities, which have been retained within the Barclays group and renamed Barclays Capital. "If we were going to dispose of these businesses, we would have done so already", he commented. Nor did he rule out a possible Barclays link-up with another European bank next year. "Europe is over-banked", he said.
NatWest, Barclays' UK High Street rival, is understood to have snubbed an approach by Barclays some months ago. Barclays is also understood to have cast its eye over Credit Lyonnais, the troubled French bank, prior to the change of government in France.
Although BZW equities division was put up for sale in October, Barclays had been weighing up its involvement in investment banking for some months.
Mr Taylor explained: "It was a really a question of whether we believed the business was going to cut it. We decided that on the debt side it was, but on the equity side it wasn't".
Back in January, Mr Taylor proposed to the board that parts of BZW should be sold off, but the board turned down his proposal, saying that BZW was improving its trading position. Mr Taylor said yesterday he was "content" with the decision at the time, but that, on reflection, perhaps he "shouldn't have been".
Soon after Mr Taylor's proposal was turned down, Morgan Stanley, the US investment bank, announced it was to join forces with Dean Witter, the US stockbroker. If the announcement had come a little earlier, it could have helped persuade the board to sell off BZW at the beginning of the year, according to Mr Taylor.
But it was the second "mega merger" of the year - between Salomon Brothers, the US bank, and Smith Barney, the US stockbroker - that was to hasten the demise of the BZW name. "The business is moving at a very fast pace", admitted Mr Taylor at the time.
Although the proposed sale of of BZW initially attracted a number of interested parties, the potential bidders slowly but surely dropped out of the race.
CSFB eventually secured the acquisition of Barclays' European equities operations for a knockdown price - pounds 50m less than book value - but at the time turned its nose up at Barclays' overseas subsidiaries.
BZW's Australasian operations, yesterday sold to ABN for pounds 14m more than net asset value, were regarded by the City as the most commercially sound of the overseas subsidiaries. Although CSFB is now in "advanced negotiations" over the purchase of BZW's Asian equities operations, closures were "not out of the question", according to one source. Last month Barclays shut down its Japanese equities business after failing to find a suitable bidder.
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