Halifax, which announced a business reorganisation on Thursday, has decided a tie-up with Barclays would not produce worthwhile savings for the former building society, the Financial Times has reported.

The paper says Halifax believes that there is no commerical logic for a mortgage provider such as itself merging with a major clearing bank like Barclays.

Halifax, the UK's largest mortgage lender, believes it already has a well-rationalised branch network compared to Barclays with many more customers per branch, the paper reports.

There has been ongoing speculation that Halifax had approached Barclays, eager to combine its home loan and savings customers with Barclays massive current account customer base.

Halifax has said it wants to diversify away from mortgage and savings and ruling out a merger with another bank may boost speculation about a possible tie-up with a life assurance group.

Prudential and Norwich Union have already been rumoured as possible merger partners for Halifax.

Lloyds TSB has been rumoured to be eyeing Halifax for a takeover bid.

Business overhaul

Meanwhile, Halifax has announced a corporate reorganisation under which it will divide the group into five main business areas from 1 January - distribution, retail financial services, clerical medical, treasury and group.

Retail financial services will include all the businesses sporting the 'Halifax' name while the group division will incorporate all those services used by business.