What's On The Menu When Two Bank Bosses Dine ?

The Observer reports that Barclays Bank CEO Matt Barrett was seen having dinner with Credit Suisse boss John Mack last week. CityNews wonders what was on the menu.

Now, of course when two senior men like these are seen out together, the rumour-mill will work overtime. And it just might have been no more that a friendly catch-up chat over a good dinner after a busy day at the office. But let's speculate for just a moment and look at the clues. You judge whether a Credit Suisse / Barclays merger is so far-fetched an idea.

Shares in Barclays took a bit of a knock recently after Bank of America announced that it would buy Fleet. Investors had priced in the possible acquisition of Barclays and a Bank of America deal now looks unlikely. Barclays, however, remains in play.

The UK bank is said to be busy looking for acquisitions in America, perhaps to ward off its own takeover. CSFB are said to be acting as Barclays' adviser for the hunt. Reason enough for the dinner, then ? Perhaps.

John Mack is keen to build up Credit Suisse and cement his reputation there. He will need to demonstrate that he can do more than just cut costs. Matt Barrett is soon to step down as CEO. Although he will become Group chairmam, he will be keen to go out on a high.

The two banks have extensive insurance, private banking and asset management interests, which would be very powerful in a bigger merged entity.

Barclays Capital has been very successful over the last two years, but with the shine coming off the bond market, the good days may be over for a while. The business is thought to be vulnerable if CEO Bob Diamond quits and takes his henchmen with him. Diamond recently lost out to take over from Barrett and is said to have already been approached about a couple of high-profile Wall Street jobs.

The overlap at investment banking would really only be on the fixed-income side. A bigger merged bond business would be quite a player in the global markets, ready to take advantage of a huge combined balance sheet. There would be no overlap in retail banking.

But this is really idle speculation. Barrett and Mack, of course, may just have been talking about possible US acquisition targets and the only other thing on the menu might have been the steak.

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