City & Business: BZW back to the future

Barclay's decision to fold its cards in the merchant banking game highlights Factor One in the global financial services industry: The industry is rationalising, and particularly so in Europe.

We know this intuitively, because the single currency will make cross- border bank mergers on the continent inevitable. But we also know it statistically. In 1990, there were 2,586 banks in the European Union, the European Free Trade Association, and Switzerland, according to the Brussels-based Banking Federation of the European Commission. By 1995, that number had increased to 2,915. Upshot: Europe, which was always known to be overbanked, has become more, not less, overbanked in recent years in the face of the growing consensus that there has to be consolidation.

But the announcement of Barclay's plans to flog much of BZW highlights Factor Two for the European banking scene as well. Despite all the pseudo- insider gossip, no one knows what is going to happen next. When Barings collapsed, who predicted that its remains would be picked up by the Dutch counterpart to Post Office Counters, which is only a slightly conflated description of ING bank.

Now who dares predict who the buyer of BZW will be? I doubt anyone has ever mentioned Rabobank, another Dutch banking giant, in connection with any financial merger ever. And yet Rabobank is one of the 50 largest banks in the world. It is outside the ken of knowing gossip, because it remains a co-operative without a public quotation.

No one is saying Rabobank will hit the headlines tomorrow. But no one can say it won't, either.