Barclays fails to deny talk rumours

STANDARD Chartered shares are set to soar again this week following the failure yesterday of Barclays Bank to deny weekend press reports that it had held merger talks with the international bank.

It is understood that Martin Taylor, chief executive of Barclays, had dinner with Malcolm Williamson, his opposite number at Standard Chartered, two weeks ago, at which the possibility of a merger was suggested by Mr Taylor. Mr Williamson promised to mention it to his board. When the story hit the dealing rooms last Friday Standard's share price rose 45.5p to 764.5p.

The City rumour mill was further excited by talk that Tan Sri Khoo Teck Puat, the Malaysian millionaire, may be about to sell his 15 per cent stake in Standard which he bought in 1986 - as one of three "white knights" who helped to rebuff a bid from Lloyds Bank. It is understood that if Tan Sir Khoo does intend to sell, he has not informed Standard of his intention so far.

A spokeswoman for Barclays said yesterday reports of talks with Standard were "market speculation. There's an awful lot of speculation in the banking sector at the moment. As a policy we don't comment on it".

A spokesman for Standard Chartered said: "We don't comment on market speculation. We're not in discussions with anyone."

Standard has become the subject of bid talk not least because its share price was savaged late last year by the Asian financial crisis. Ironically, that share dive helped to scare off Deutsche Bank, which had been considering a link with Standard. The crisis halved Standard's share price, which bottomed out at just over 540p this January.

Mr Taylor's comments at Barclays' results briefing last week were interpreted in the City as distancing the bank from earlier attempts to merge with NatWest. In particular, Mr Taylor said that he "expected consolidation in the banking sector internationally in the next few years", a remark which observers seized on as suggesting that a link with Standard may be on the cards.

Standard's market capitalisation stands at pounds 7.6bn, suggesting any bid would have to be for well over pounds 8bn, according to analysts.

Privately, Barclays is irritated at the City's perception that it has to do a deal, in some form or another, following its retreat from investment banking and the sale of most of BZW.