US bank stalks Flemings

Chase Manhattan has also been linked with other banks

The US banking group Chase Manhattan is in takeover talks with UK-based investment bank Robert Fleming.

"The board of Robert Fleming Holdings Limited confirms that it is in discussions with the Chase Manhattan Corporation concerning a possible combination of their businesses," the company said in a terse statement after the stock market closed.

Fleming's is one of the UK's last remaining independent financial groups.

Valued at about £3bn, it was the subject of takeover rumours in 1998 concerning Germany's Commerzbank.

Independent stance

But the bank has previously stressed its intention to remain independent.

The business dates back to 1873 and employs 7,500 people in more than 40 countries.

It is best-known to the public for its Save & Prosper and Fleming Asset Management operations. It currently handles more than £70bn in funds.

Firmer foothold

The Fleming family still controls 29% of the group, with Jardine Matheson holding 18%.

Chase Manhattan, America's second largest bank, has been looking to develop its investment banking business.

Fleming is especially strong in the mergers and acquisitions field - an area in which Chase is keen to expand.

Acquiring Flemings would also give it a firmer foothold in Europe.

"It's quite a good fit but it would be a sad day for British banking," said one analyst.

Employment specialists predicted little fallout of jobs from such a takeover.

"If any staff are to go it will be in the back office area, but there aren't that many overlaps," said Richard Lyons of Carr-Lyons Search and Selection.

Major consolidation

There has been much recent talk about a mega-merger involving Chase. It has been linked with both Goldman Sachs and Merrill Lynch.

The past few years have seen major consolidation in the US banking and stockbroking sector, led by the merger of Citigroup, owner of Citibank, with Travelers, owner of Salomon Brothers.

NationsBank merged with BankAmerica, and Bankers Trust was bought by Deutsche Bank.

The takeover of Flemings would be the second US purchase this year of an independent UK business. In January, Schroders sold its investment banking arm to Citigroup for £1.35bn.

It will also lead to renewed speculation about the future of other independent UK banks such as Lazards and Cazenove.

Banking stocks reached new highs on Thursday on Wall Street, as long-term interest rates fell despite the Fed's rate increase on Tuesday, making it easier for Chase to acquire Fleming through a stock offer.