Should Barclays Acquire NatWest? This Analyst Thinks So

The Barclays share price has bounced back in the past few weeks after the company published strong quarterly results. The stock is trading at 185p, which is about 150% above its lowest level in 2020. On the other hand, the NatWest share price has jumped to the highest level since February 2020. 

Should Barclays acquire NatWest?

In an opinion published on Monday, Matthey Lynn made several suggestions of potential mergers and acquisitions among UK businesses. His idea was that some large UK companies should not be left out in the ongoing merger mania that is targeting UK companies. Some of the recent companies that have been announced are of Meggitt and Morrisons.

In his piece, he suggested that Asos should acquire Burberry while Vodafone should buy BT. At the same time, he also suggested that Barclays should acquire NatWest, formerly known as Royal Bank of Scotland. No deal has been announced so this article is based on hypotheticals. 

First, let us look at the size. Barclays is a global bank with a market capitalization of more than 31.33 billion. The company has more than 83,500 employees. It makes money through its commercial and trading and investment arms. Barclays has more than 1.34 trillion in assets and about 15% of CET Tier 1 ratio.

NatWest, on the other hand, is a national bank with no major global presence. The firm is valued at more than 25 billion pounds and has more than 58,000 employees. It makes money mostly through consumer and business lending. It has more than 800 billion pounds in assets and a CET 1 Ratio of 18.5%. In terms of Revenue, NatWest made more than 14.25 billion in 2019 before the pandemic while Barclays made 21.6 billion pounds.

So, would that deal work? For one, big bank mergers in the UK are relatively rare. In the US, the biggest mergers have been among regional banks like when M&T decided to acquire People’s United while Webster acquired Sterling. Also, because of their sizes, the deal would be a merger of equals. It would also attract substantial regulatory scrutiny in the UK. However, with the government exiting its NatWest stake, there is a possibility that it would be allowed. The deal would create the 9th biggest bank globally by assets.

Barclays share price analysis

The daily chart shows that the BARC share price has been in an upward momentum. Along the way, it has moved above the important resistance at 170p. It has also risen above the 25-day and 50-day moving averages. The shares have returned to the horizontal channel shown in black.

Therefore, the stock will likely keep rising as bulls target the key resistance at 190p. However, a drop below 157p will invalidate this view.

Barclays share price