Credit Suisse and Barclays in advanced talks

The future of BZW was last night being thrashed out between executives from Credit Suisse First Boston and from Barclays, owners of the troubled investment bank. But, as Lea Paterson reports, the City is likely to be disappointed, whatever the outcome of the takeover talks.

CSFB, now the only bidder left for the equities and corporate finance business of BZW, was thought to be close to clinching a deal last night. An announcement could be made by tomorrow at the latest.

A source close to one of the two sides said the talks were at a very advanced stage. The source, who declined to be named, added: "I'm anticipating an announcement late tonight or early tomorrow."

Investors yesterday were confident a successful conclusion would be reached. Shares in both CSFB and Barclays climbed in anticipation of a deal. In Zurich, CSFB's shares closed up 5 per cent, and in London, Barclays' shares closed at pounds 15.06, up 13p on the day.

Banking analysts, though, said the negotiations over price were fraught with difficulties. One leading analyst, who also wished to remain anonymous, said: "The problem for Barclays is that there is only one bidder left. The problem for CSFB is that it is the only bidder."

He argued that if the two sides were unable to agree terms, then Barclays may be forced to sell off BZW in piecemeal fashion, a move that was likely to leave Barclays with "unsellable" divisions.

Until now, Barclays has been determined to collectively sell BZW's equities and corporate finance business, a stance which prompted Deutsche Morgan Grenfell to bid for NatWest's equity division last week rather than BZW's.

Analysts said that if the Swiss and Barclays reached an agreement, then the pressure would be on CSFB not to pay over the odds. There has been speculation that BZW would fetch pounds 500m.

However, one analyst commented that, given CSFB's negotiating position, the pounds 500m price tag looked "excessive".

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