From basket case to buyer. Less than two years ago, almost everyone assumed that Barclays would join Royal Bank of Scotland and Lloyds Banking Group in taking a bailout from the Government. Having avoided that fate, its recovery has been so strong that City gossips now take very seriously talk that Barclays is planning a major acquisition in the US retail banking sector.
One can see the case it might make. There are a number of bailed-out US banks that might represent an attractive opportunity and the purchase of the US assets of Lehman Brothers, its last big deal, now looks to have been a slam dunk. That deal, of course, was in the investment banking universe – a retail acquisition would be a sensible bit of diversification given the regulatory pressures Barclays Capital now faces.
Still, shareholders have every right to be nervous. Barclays, in common with most other banking groups, will again have to address its capital funding in the years ahead. Tapping investors for acquisition cash could prove a big ask.
Moreover, British banks have almost universally fared poorly in the US retail market and even if Barclays were to end that run of failure, it would find itself exposed to the more aggressive elements of President Obama's administration, who have strong views about enforcing a more rigid separation of retail and investment banking activities.
Barclays is entitled to insist that, relatively speaking at least, it has had a good crisis. It is worth remembering, however, that the bank also got supremely lucky when it lost out to Royal Bank of Scotland in the bidding war for ABN Amro, a victory that sunk its rival. Maybe it's a little early to be thinking about pushing that luck any further.