Barclays US retail acquisition ‘makes little sense’, shareholder claims

12 March 2010

Shareholders at Barclays have warned the bank may struggle to win support for its reported acquisition of a retail bank in the US.

Antony Jenkins, recently-appointed head of Barclays’ retail banking unit, is thought to be outlining a strategy to be passed before the organisation’s board detailing the plans.

Although no one from Barclays has confirmed a takeover of a consumer operation is going ahead, some investors have criticised the potential move.

Jane Coffey, fund manager at Royal London Asset Management, told Bloomberg, if reports are true, “it does not make a lot of sense”.

“Very few European banks have made a success of buying US retail banks and almost all have lost their shirts doing it.”

Ms Coffey cited the example of HSBC, who suffered millions of dollars of subprime losses after acquiring Household in 2003.

She added that financial service industry regulators in the US would also be concerned by such an acquisition, as it may expose a retail bank to investment bank risk.

“Investment banks should be financed through wholesale markets, not deposits,” the asset manager concluded.

SunTrust Banks in Atlanta and the Pittsburgh-based PNC Financial are rumoured to be among the organisations on Barclay’s wish-list of acquisitions.

By Jim Ottewill

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