Foreign players at forefront as interest in Barings heightens

part of the collapsed merchant bank Barings.

But while they said that there were considerable expressions of

interest no details were available though it is believed that two

groups, both from outside the UK, remain at the forefront.

It seems likely, though, that Barings will not be sold as one unit but

that offers will be made for various parts of the bank with particular

interest centering on asset management.

One group that has been mooted as a possible player is United Asset

Management, the substantial US investment house which acquired

Glasgow-based Murray Johnstone in 1993.

The administrators are clearly anxious to proceed quickly to avoid the

danger of key personnel leaving which would lower the attraction to a

buyer. It is understood that financial headhunters have already been

flooded with calls from Barings' employees. Scarcely surprising in the

circumstances.

Barton Biggs, managing director of US investment bank Morgan Stanley,

which had been intending to acquire Warburg before the deal collapsed,

said that Morgan would be interested in bidding if the price was right.

And Dutch group ABN AMRO was said to be weighing a bid for key parts of

the bank.

Dresdner Bank is watching the situation but in the main the German

banks appear unenthusiastic with Deutsche Bank, Commerzbank and

Westdeutsche Landesbank saying they were not interested and had not sent

anyone to London to take part in purchase discussions.

Potential bidders include National Westminster, Barclays and Midland

Bank's owner HSBC which expressed an interest on Monday in Barings fund

management side.

It is the fund management activities that would probably attract most

interested parties and would raise the most funds. But a complication

here could be if clients' money was deposited with the bank. As it is

#2m on deposit by the fund management business has naturally been

frozen. But it is not yet known whether any clients money is deposited

with the bank.

Yesterday Barings Stratton Investment Trust said it would carry on its

investment business. It said: ''Stratton considers the ownership of

these assets is unaffected by the appointment of the administrator and

that the manager is therefore free to deal with the investments in the

normal course of business.''

Stratton has #29.1m under management. It has #1.8m on deposit with

Barings which has been frozen by the administrators and borrowings from

the bank of #2.4m.

Two offshore funds which have been suspended from trading on the stock

exchange are Baring Emerging European Trust and Baring Chrysalis. This

is because the position of their custodian, Baring Brothers (Guernsey),

vis-a-vis the appointment of administrators to Barings, is not yet

clear.

Meanwhile, there was considerable derision yesterday among City

traders at Barings chairman Peter Baring's assertion that the bank could

have been the victim of deliberate sabotage. The suggestion was also

knocked down in the Far East. It was known in the markets for some time

that Barings was running a huge position on Nikkei 225 futures contracts

which were growing all the time. Barings was culpable, it was suggested,

in giving trader Nick Leeson his head without any apparent controls or

even monitoring.

The Japanese equity market, whose slump was the trigger for so much

grief for Barings, yesterday came under criticism from Japanese

securities house Nomura's global strategist Nick Knight. He has cut the

Japan weighting in his model portfolio to 16% from 20%.

He said: ''We now know that the market was being artificially

supported by a large single buyer in recent weeks, and yet the weight of

generalised selling drove it down.''

It is the second time this month that Nomura's analyst has issued a

bearish note on Japan. On February 8 he slashed his recommended

weighting to 20% from 34%.

Prior to that date Nomura had been keen on Japan and increased

weightings there as recently as last month. Japan, not the US, may be

the big risk to world financial markets, is the view now of the Nomura

analysts.

This is in stark contrast to the view of James Capel's global

strategist, Peter Oppenheimer, who suggests switching into Japanese

equities from US equities. The said that the start of the next Japanese

bull market is close at hand. He has increased Japanese equities to an

overweight 27.5% of his global portfolio from 23% and cut four

percentage points from the US to 23.8%.

So you pays your money and you make a choice. Or perhaps better still

leave well alone. Either way it is too late for Barings.