Barclays hits bid trail in US and approaches RBS target

Barclays has held exploratory talks with three US banks, including one that is a bid target for its rival, Royal Bank of Scotland.

John Varley, Barclays' finance director and chief executive elect, is understood to be leading a team that is looking at buying a retail bank in the north east of the US.

Barclays, which is being advised by CSFB, has had talks with Sovereign Financial, the Pennsylvania-based bank which was believed to be close to a deal with RBS, and two New York banks, North Fork and GreenPoint Financial.

Sovereign shares hit new highs last week after The Independent on Sunday revealed detailed talks between it and RBS. The shares, which closed a week ago at $20.81, shot up on Monday morning and were briefly suspended on the New York Stock Exchange. After trading at just about $22 for most of the week, they suddenly stormed up to $24.99 just before the close of trading on Thursday.

They then slipped back on Friday to close at $23.65, valuing the group at around $7bn (£4.2bn).

RBS is understood to have offered $25 a share for Sovereign but its chairman, Jay Sidhu, is holding out for $30.

Barclays has also spoken to Mr Sidhu but is not believed to be as advanced in its talks.

It has turned its attentions to the New York market, where HSBC has a strong presence with Republic Bank.

Barclays has met with executives from North Fork, which is based in New York City and is valued at $6.1bn, and GreenPoint, the second-largest savings bank in New York, which is valued at $4.4bn.

Last month Bank of America paid $47bn for FleetBoston, the New England bank, in a move that has prompted a bidding frenzy in the US retail financial market.