RBS poised to renew offer of merger with Barclays - Business - News - The Independent

RBS poised to renew offer of merger with Barclays

ROYAL BANK of Scotland was last night standing by to renew its offer of an agreed merger deal with Barclays Bank, the high street financial giant which has been left rudderless by the shock decision yesterday of its new chief executive Mike O'Neill to retire on health grounds on his first day in the job.

The Scottish bank had agreed to meet senior Barclays executives to discuss a possible merger back in February, only for the meeting to be cancelled at the last minute after Mr O'Neill had agreed to join the group.

The RBS chief executive, Sir George Mathewson, is now understood to be planning fresh overtures in the light of yesterday's developments.

The prospect of a bank mega-merger helped drive the FTSE 100 up more than 70 points to a record high of 6,513.1.

RBS and Barclays - which have both risen by 40 per cent so far this year - rose sharply again yesterday, putting on 62p to pounds 14.25 and 46p to pounds 19.99 respectively as merger speculation took hold.

RBS is believed to have identified potential cost savings of pounds 200m from a merger with Barclays, in addition to the benefits it would bring to the bank by providing an instant solution to its leadership crisis. The bank has a tried and respected senior management team headed by Sir George and Fred Goodwin, the deputy chief executive who joined RBS last year from National Australia Bank.

One investment banker said yesterday: "Mathewson and Fred Goodwin, his deputy, are an impressive team."

Because of the disparity in size, the deal would have to be structured as a reverse takeover by RBS of Barclays, with Edinburgh being given at least a symbolic role as group headquarters in order to pacify Scottish public opinion in the run up to the first Scottish assembly elections. RBS has a market capitalisation of pounds 12bn against pounds 20bn for Barclays.

Sir Peter Middleton, Barclays' acting chief executive, insisted yesterday that the bank would not be panicked into a merger, but neither would it reject reasonable propositions out of hand.

"We've demonstrated that we can push the business forward with the divisional heads," he said.

The bank was confident that having done much of the spadework already, the headhunters Spencer Stuart would be able to come up with alternative candidates within a reasonable timeframe.

However, investment bankers warned that given the current merger frenzy in Europe and the growing likelihood of Britain joining the euro zone before long, institutional investors bitten by the merger bug may not have the patience to sit tight and wait for the search for a new chief executive to bear fruit.

One financier said last night: "They have seen what has happened to bank share prices abroad where mergers have taken place. We have been waiting over a year for a merger in the UK banking sector and nothing has happened. Earnings are steady but not spectacular, business is flat; the market is looking for something else to take the FTSE on. This might be the gap everyone has been looking for."

Outlook, page 17

News
John Travolta is a qualified airline captain and employed the pilot with his company, Alto
people'That was the lowest I’d ever felt'
Life and Style
healthIt isn’t greasy. It doesn’t smell. And moreover, it costs nothing
News
peopleThe report and photo dedicated to the actress’s decolletage has, unsurprisingly, provoked anger
Property
Home body: Badger stays safe indoors
property
PROMOTED VIDEO
News
The programme sees four specialists creating what they believe are three perfect couples, based on scientific matchmaking. The couples will not meet until they walk down the aisle together
tvUK wedding show jilted
Arts and Entertainment
US pop diva Jennifer Lopez sang “Happy Birthday” to Gurbanguly Berdimuhamedow, president of Turkmenistan
musicCorporate gigs become key source of musicians' income
Arts and Entertainment
You've been framed: Henri Matisse's colourful cut-outs at Tate Modern
artWhat makes a smash-hit art show
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
filmsDaniel Craig believed to be donning skis as 007 for first time
Sport
Mikel Arteta pictured during Borussia Dortmund vs Arsenal
champions league
Voices
Yes supporters gather outside the Usher Hall, which is hosting a Night for Scotland in Edinburgh
voicesBen Judah: Is there a third option for England and Scotland that keeps everyone happy?
Arts and Entertainment
Pulp-fiction lover: Jarvis Cocker
booksJarvis Cocker on Richard Brautigan
Arts and Entertainment
Robin Thicke and Pharell Williams in the video of the song, which has been accused of justifying rape
music...and he had 'almost no part' in writing it
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Sales Executive

£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

Payroll & Accounts Assistant

£20 - 24k + Benefits: Guru Careers: This is a great opportunity for an enthusi...

SQL Developer - Watford/NW London - £280 - £320 p/d - 6 months

£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Senior BA - Insurance **URGENT**

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week