Barclays plays down Abbey rumours

Barclays today hinted that it was not interested in bidding for Abbey National, the mortgage bank that has agreed to be taken over by Spain's Banco Santander Central Hispano.

Although he declined to comment directly on whether Britain's third largest bank was considering a bid for Abbey, Matt Barrett, the chief executive of Barclays, said: "We're not reliant on transactions to achieve our strategic and financial goals over time."

Mr Barrett went on to say that Barclays considers mergers and acquisitions "as the servant of strategy and absolutely not the master". But he did agree with recent comments by Fred Goodwin, the chief executive of Royal Bank of Scotland, who said that European cross border mergers or takeovers were no longer improbable in the wake of Santander's bid for Abbey.

"If you look at continental Europe, you have an 'overbanked' situation and if you erase the borders between the different countries from your mind, clearly there is an opportunity for consolidation within Europe - specifically to get in line with the unification of the single market there," Mr Barrett said.

Mr Barrett's remarks came as Barclays reported record half-yearly pre-tax profits of ?2.4bn, up 23% from ?1.9bn a year ago and ahead of market forecasts.

"We intend to continue to invest in organic growth which, as you can see, has delivered for us again in today's numbers," Mr Barrett said.

Barclays benefited from a strong performance from its global product division, including such businesses as Barclays Capital and Barclays Global Investors. Barclays Capital increased profits by 37% to ?599m, while the contribution from Barclays Global Investors was up 73% at ?157m.

John Varley, the incoming chief executive, said: "It was a sparkling set of results from Barclays Capital, which is making a big contribution to the group."

Barclays also said it could not rule out further job losses at the London head office of its UK retail banking business on top of 800 already announced in June.

The group said any cuts would be part of efficiency savings from merging its UK retail banking and UK business banking activities, which will fund an extra 1,000 customer-facing staff in the retail business and improvements to systems.