Schroders, one of the last independent investment banks in London, saw its shares soar 53p to 1,463p yesterday as the market scented a bid from either the Dutch ABN Amro or Merrill Lynch of the US.
The move, a two-day gain of 88p, pushed Schroders' stock market value to pounds 2.6bn. The prize would be the pounds 67bn of funds it manages.
Both ABN Amro and Merrills stoutly denied they had any interest in approaching Schroders, which is 48 per cent- family owned. This failed to dampen speculation that some large institution is about to make a play for Schroders' respected fund management and corporate finance operations. Schroders itself said yesterday: "We never comment on market rumour."
ABN Amro, the largest Dutch bank, said growth through acquisitions remained a central plank of its international strategy, but dismissed persistent talk it was circling Schroders.
"We have no plans with Schroders... [the rumours] are in the realm of fairy tales, " the chairman, Jan Kalff, said.
Announcing the Dutch group's half-year results, he said that Schroders' business was mainly corporate finance and asset management which did not need the levels of capital which had recently driven other British merchant banks into the arms of large foreign partners. But ABN Amro remained on the look-out for likely opportunities.
Jerome Kenney, the Merrill Lynch executive who masterminded the American takeover of brokers Smith New Court, said on Thursday that Merrill had no intention of bidding for Schroders.
Mr Kenney said that when Merrill started to look at takeover targets in the City, they concentrated on houses with securities operations. These need large amounts of capital, making smaller players vulnerable. SG Warburg, Barings and Kleinwort Benson, which have fallen to overseas bidders this year, all have securities arms.