Break-up deal may be decided today

THE BREAK-UP

BY JOHN WILLCOCK

The extraordinary time pressure to come up with a sale of Barings' operations before mass staff and client defections may force the bank's administrators to decide on a deal as early as today, City sources said last night.

The lights burnt late into the night at Barings' Bishopsgate head office as banks jockeyed for the coveted jewel in the crown - Baring Asset Management (BAM), with its £30bn of funds under management.

Baring Brothers, the corporate finance side, is also being keenly bid for. Baring Securities is less sought after, according to sources close to the talks.

Bank sources said the administrators were running out of time since entities like BAM, which might fetch around £300m, would quickly plummet in value if key staff left or investors withdrew funds.

NatWest's integrated investment banking arm, NatWest Markets, is a keen bidder, but faces stiff competition from other eager buyers including the German bank Bayerische Vereinsbank..

NatWest Markets handles investment management, treasury operations, securities, corporate finance and other functions. NatWest has said in the past it wants to strengthen its asset management and advisory operations. No one was available for comment yesterday.

ABN Amro is weighing a bid for Barings' corporate finance team and BAM. The Dutch bank is among those most closely circling the corpse of the collapsed merchant bank but must beat off rivals that include US broker Merrill Lynch and Britain's HSBC Holdings, the sources said.

"ABN Amro is pitching at £50m for the corporate finance team and about £250m for BAM," said one banker.

Jules Prast, a spokesman for ABN Amro in Amsterdam, said: "We are in principle interested in parts of the bank, but we are not going into details. We have not made a $1bn bid for Baring Securities, as has been reported. We have no plan to merge the corporate finance side into our UK merchant bank, Hoare Govett."

Merrill Lynch has a more aggressive bid on the table for BAM, but the sale is complex because £633m of BAM's client cash is frozen on deposit at Barings and may be lost. Merrill Lynch declined to comment.

Such a deal would signal the break-up of the 233-year-old bank - a development which now looks inevitable.

Barings management is fighting hard to keep its ancient name. ABN has offered to boost Barings' staff bonus pool by £3m to £10m and may even be prepared to merge its own London corporate finance team under the Barings mantle, one banker said.

Such a solution would spell disruption for Hoare Govett's 500 staff. ABN denied it was even under consideration.

HSBC, London-based parent of Midland whose units include Hong Kong and Shanghai Banking Corp and Marine Midland in the US , is cited as a possible bidder. HSBC handles securities through its stockbroker James Capel and fund management through HSBC Asset Management.