Barclays 'mulls over Abbey move'

A merger would mean branch closures

Barclays is reported to be eyeing up its High Street rival Abbey National for a possible takeover bid.

Chief executive Matthew Barrett is thought to see a merger of the two as a way of increasing Barclays' presence in the lucrative mortgage market, according to the Financial Mail on Sunday.

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The former building society would not come cheaply - a price tag of some £15bn is likely, according to some estimates, the newspaper says.

Shares in Abbey National are expected to be boosted by the reports. They close at £7.49 on Friday, valuing the bank at £10.65bn.

Rumours that it could be a takeover target started when the share price slipped from last year's high of £14.35.

Barclays would not necessarily be the only bank with its sights on the Abbey. Lloyds TSB and various foreign institutions have been touted as being interested too.

Barclays shares finished the week 10p lower at £16.32. With a value of £24.2bn, it is worth more than twice the Abbey's market capitalisation.

More closures

A merger of the two could herald branch closures as well as heavy redundancies among Abbey National staff.

This would leave Barclays open to a wave of further criticism. Last month it was attacked for closing more than 170 of its bank branches in rural locations.

Mr Barrett and his chairman Sir Peter Middleton have also come under fire for their huge salaries.

Speculation of consolidation in the UK banking sector has been spurred by Royal Bank of Scotland's recent takeover of NatWest, which began by Bank of Scotland launching a bid last September.

A Barclays spokesman declined to comment on the report, while Abbey National would only say: "In this market, everybody is looking at everybody else."