Barclays Diamond Takes a Shine to U.S. Brokers

Is Robert Diamond, the head of Barclay's (BCS-NYSE) out of his mind? Reports out of Europe indicate that he is considering doing a Jamie Dimon impersonation, and buying a U.S. financial institution:

Bob Diamond, the bank's president and the head of its investment banking arm, is thought to have looked at both Lehman Brothers and UBS in recent weeks..... Irfan Younus, an analyst at NCB Stockbrokers, said an acquisition cannot be ruled out, but any expansion in the capital markets arena is unlikely to be well received given the perception that Barclays' write-downs still look light compared to peers.

"Bob Diamond has said several times since last summer that he would not want to miss out on the chance of taking advantage of the current market turmoil to grow in the U.S.," Younus said. MarketWatch

Apparently Diamond thinks he is operating from a position of strength, claiming that he has taken fewer writedowns and is healthier than his peers.

A glance at the chart of Barclay's indicates otherwise, however, and he is also unlikely to get a bargain basement price similar to what Jaime Dimon was handed.

And reading between the lines, Diamond's ego might be playing a role.

Barclays One-Year chart

Diamond previous stints at Citigroup and Merrill Lynch did not pan out, and to some extent he could be looking for revenge, as he tries to make his mark. But his stock is no doubt leaving a mark.

Walking away from ABN AMRO last year was probably a good move, albeit lucky, but Diamond’s shareholders might not be too thrilled to see Diamond make a large rights offering to raise capital, dilute shareholders, and perhaps hook up with a sovereign wealth fund. Doing a deal entails 18 months of integration issues, which would likely weigh on the stock as well.

Bold move, for sure, but one that is fraught with risks. Color me skeptical. Perhaps he floated a trial ballon in the press to see how the stock would respond.

Diamond’s due diligence efforts had better be thorough, in any case. Particularly is he is really looking at UBS or Lehman.

But his American roots are apparent. No guts, no glory.
___________________________________________________________

Barclays reportedly looking at deal options
Marketwatch

Barclays considers daring takeover bid in the US or UK
Times UK
----------------------------------------------------------------------------------------------------------
The content contained in this blog represents the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No Position

Comments:

<< Back to main