Barclays (BCS) Looking to Buy in the US

British banking giant Barclays (BCS) is apparently investigating potential deals to buy a retail bank in the United States. The news comes from an article in the Wall Street Journal which cites “people close to the matter” as it usually does.

Barclays is a British financial services firm with operations around the world. It is a holding company that is listed on the London and New York stock exchanges. Barclays PLC is ranked as the 25th largest company in the world by Forbes, and the fourth largest financial services provider in the world by Tier 1 capital ($32.5 billion). It is the second largest bank in the United Kingdom and the world based on asset size. In late 2008, Barclays purchased the investment-banking and trading divisions of Lehman Brothers for $1.35 billion. Barclays also acquired the New York headquarters building of Lehman Brothers, which now branded in light blue with the Barclays logo (it’s an eagle, or might in fact be a hawk).

The reports are just pure conjecture at the moment but its interesting nonetheless to contemplate which bank or banking assets Barclays might go after.

Various possibilities are doing the round but I find this summary to be most intriguing:

Suntrust Bank (STI): Based in Atlanta, the bank has $120 billion of deposits and a branch network encompassing the whole Southeast. It’s the 7th largest bank in the U.S. by deposits. Impaled by commercial real estate and mortgage losses, the company has not yet paid back all of its assistance from TARP. According to analysts, the bank might need to sell assets to raise capital thereby diluting shareholders. The bank has a current market value of $13 billion.

Comerica (CO): With $42 billion in deposits, this Texas-based bank is solid but has large exposure to highly troubled markets in California and Michigan, where it used to be located. Such problems and dire outlooks especially in Michigan might pose a problem for any deal.

RBS/Citizens Bank (RBS): The Royal Bank of Scotland Group is in the process of divesting assets, especially ones overseas, after being one of the hardest hit banks globally during the financial crisis. Citizens Bank has $101 billion in deposits and is operates mainly in the Northeast. RBS bought Citizens in 1988.

Fifth Third Bancorp (FITB), Huntington Bancshares (HBAN) and KeyCorp (KEY): All these banks are heavily exposed to middle-market consumers and corporate clients in the Midwest. The banks all operate therefore in markets Barclays is interested in serving, but even combined they lack the scale Barclays is probably looking for.

Citigroup (C): Citigroup is currently undergoing an asset divestiture and with $320 billion in deposits, it’s not unreasonable to think Citi might be interested in selling off sections of its deposit base. Barclays could buy the Citi banking assets in the Northeast, while Citi’s presence throughout the United States offers a variety of possibilities.

Personally I do not invest based on speculation, rumor or hearsay, but find the worldwide banking consolidation trend interesting. Bob Diamond, the Chairman of Barclays, is an American and has always dreamed of expanding the bank into his homeland to make it a truly global player. With their foot already in the door after the acquisition of Lehman, don’t be surprised to see Barclays snap up one of the troubled banks listed above.