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BARCLAYS, Britain's second-largest bank, is looking for its fourth chief executive in six months after Michael O'Neill resigned because of ill health, sparking speculation the bank may be vulnerable to a takeover.

Mr O'Neill, 52, who helped oversee BankAmerica's merger with NationsBank, fainted twice last week and was diagnosed with an irregular heartbeat that could be aggravated by stress. Deputy chairman Sir Peter Middleton will be chief executive until a replacement is named.

"That there's no chief executive after a long search means there's more chance for a merger - at least that's what the market is saying," said Graham Campbell, at Edinburgh Fund Managers. The shares closed down 1.5 per cent on the week.

Barclays' stock had risen 39 per cent since Mr O'Neill's appointment on hopes the American executive would put an end to losses in investment banking and emerging markets and boost returns. Barclays sold its equity business at a loss in 1997 and lost money on Russian loans last summer. Chief executive Martin Taylor quit in November amid a board dispute on strategy.

Some analysts say the shares are attractive because the bank has put these problems behind it, and another bank such as Lloyds TSB or Royal Bank of Scotland, may try to acquire or merge with Barclays. "They are now not equipped at senior management level to carry out strategic changes," said John Hatherly, head of research at M&G Investment Management.

Sir Peter said Barclays was not considering a merger as a means of injecting new management into the bank.

"The share price is telling us this resignation is not a travesty," said Michael Trippitt, a Schroders Securities banking analyst. "This is not like a fallout over strategy or trading losses in Russia."

Oliver Stocken, finance director, who was due to leave early this year, will now stay on until the summer.