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


Actress sees off speculation about her appearance in an amazing way

Arts and Entertainment
Serge Pizzorno of Kasabian and Noel Fielding backstage at the Teenage Cancer Trust concerts
musicKasabian and Noel Fielding attack 'boring' musicians
videoWatch Lynda Bellingham's tragic final Loose Women appearance
Arts and Entertainment
The last great picture - Winner 'Black and White' and overall 'Wildlife Photographer of the Year'

Arts and Entertainment
High notes, flat performance: Jake Bugg

Review: Despite an uphill climb to see Jake Bugg in action, his performance is notably flat

The Putin automaton will go on sale next month in Germany
videoMusical Putin toy showing him annexing Crimea could sell for millions

Powerful images of strays taken moments before being put down

Arts and Entertainment
S Club 7 pose for Children in Need 2001
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
'Right Here' singer Jess Glynne is nominated for Best Newcomer at the MOBO Awards 2014
musicExclusive: Jess Glynne hits out at 'ridiculous' criticism of white artists nominated for Mobo Awards
'Irritatingly Disneyfied': fashion vlogger Zoella

Arts and Entertainment
Enid Blyton's Magic Faraway Tree is to be made into a series of films

Enid Blyton’s Magic Faraway Tree really is being made into a film

Arts and Entertainment
Russell Brand has written a book of political analysis called Revolution

Review: Witty banalities aside, the comedian has an authentic voice

Arts and Entertainment
Separated at birth? Frank Sivero (left) claims The Simpsons based Mafia character Louie on his Goodfellas character
arts + entsFrank Sivero sues Simpsons studio over allegedly basing mobster character on Frank Carbone
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...

Trainee Recruitment Consultant Birmingham

£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

Trainee Recruitment Consultants

£20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...

Helpdesk Analyst

£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Lonely Planet’s Best in Travel 2015

UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London