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Bank of America may Buy Barclays

An analyst at the investment bank Merrill Lynch said that the Bank of America is considering buying the British Bank Barclays. Due to this news Barclays` stocks rose more that 4% Friday. The analyst Edward Najarian wrote in a memo to his clients that the Bank of America has mentioned in that their next plans of expansion would be turning into a commercial bank and a leading global investment bank, and to achieve these goals he believed that the Bank of America would be very interested in buying Barclays.

Barclays` shares rose $2.46, equivalent to 4.41%, and closed at $58.25 at the New York Stock Exchange (NYSE) of Friday. Bank of America shares, on the other hand, lost $0.83, equivalent to 1.58%, and closed at $51.66 a share. The spokesmen of both the Bank of America and Barclays said they would not comment on the rumors.

Barclays is the third largest bank in Britain by market value. The Bank of America is the United States` second largest bank after CitiGroup. Merrill Lynch analysts said that the announcement of the deal between the two banks would be given shortly. They believe that the Bank of America would be willing to pay a premium of up to 30% in order to close the deal with Barclays. Since Kenneth D. Lewis was appointed CEO of the Bank of America in 2001, the company has invested over $90 billion in acquisitions, including the purchase of Fleet-Boston Financial Corp. for $48 billion. Merrill Lynch estimate Barclays would save the Bank of America up to $2.95 billion annually.