Barclays shares slide on Woolwich concerns

Shares in Barclays Bank fell for the second day yesterday amid continued concern about the bank's £5.33bn bid for Woolwich, the mortgage bank.

Shares in Barclays Bank fell for the second day yesterday amid continued concern about the bank's £5.33bn bid for Woolwich, the mortgage bank.

The shares fell 34p to 1,581p, taking the fall since the talks were confirmed to 86p or 5 per cent. Some £1.27bn has been wiped off the value of Barclays since Tuesday.

Bankers said they expect the deal to be formally announced today. However, some investors were unsettled by talk about tension on the Barclays board over demands from Woolwich that John Stewart, its chief executive, be given prime board responsibility for the entire retail bank in preference to John Varley, Barclays chief executive of retail services.

Talk of Matt Barrett, Barclays chief executive, stepping down early in favour of Mr Stewart was dismissed as fanciful by most analysts yesterday.

"Neither Barclays nor Woolwich could really afford to see this go down now, but Matt Barrett will not be happy at the way this has been received, judging by the share price," one banker said yesterday.

Analysts at Goldman Sachs and Merrill Lynch are broadly in favour, while Fox, Pitt Kelton, which initially came out strongly against the deal, was less negative yesterday.

Most analysts believe that yoking Woolwich's hi-tech Open Plan system to Barclays' bigger customer base would enable Barclays to sell higher volumes. But they believe that the benefit will be wiped out by a sharp fall in margins particulary on products such as credit cards.

David Townsend at Goldman Sachs said that the deal could be earnings enhancing on £150m of annual savings.