Shares of Barclays PLC rose by more than 4 percent on Friday after an investment analyst advised clients that Bank of America Corp may be interested in bidding for the London-based banking company.
"Bank of America has previously indicated that the next phase of its expansion is to become a leading global commercial and investment bank," Merrill Lynch research analyst Edward Najarian wrote in a note to clients on Friday.
"In order to achieve that goal, we believe Bank of America is very interested in acquiring Barclays," he wrote.
The investment note said such a deal would be profitable even if Bank of America had to pay a 25 percent to 30 percent premium to acquire Barclays.
Barclays' US shares rose US$2.46, or 4.41 percent, to close at US$58.25 on the NYSE, while Bank of America shares fell US$0.83, or 1.58 percent, to finish at US$51.66.
Bank of America spokesman Scott Silvestri said it is the bank's policy not to "comment on market rumor or speculation."
Barclay's spokesmen in London and New York said the company did not comment on market rumors.
Bank of America has a market capitalization of around US$240 billion compared with Barclay's US$90 billion.
Barclays, the UK's third-largest bank by market capitalization, would give Bank of America a significant international presence as well as a major UK retail and commercial bank and the UK's biggest credit-card business, Najarian wrote.
"We think Barclays is the perfect fit for Bank of America, given our understanding of Bank of America's international aspirations," he wrote.
Bank of America, based in Charlotte, North Carolina, is currently the second-largest bank in the US by market capitalization behind Citigroup Inc.
Bank of America wants to make itself a leader in global businesses such as treasury management, asset management and fixed-income underwriting and trading, Najarian wrote.
However, the note said "there could be certain corporate customers of Barclays that may not want to give business to a US-based bank.
"However, we think this would prove to be very minimal, assuming Bank of America chooses to retain the Barclays brand internationally," the note said.
Bank of America recently reported third-quarter net profits of US$5.42 billion, up 41 percent from the same period a year ago.
It has expanded aggressively in recent years. In January of this year, Bank of America acquired the MBNA credit card group shortly after acquiring FleetBoston Financial.
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