Investec has reiterated its 'buy' rating and 250p target price for UK banking group Barclays after the firm's purchase of the ING Direct UK business, saying that its reflects the process of 'evolution, not revolution'.

"While other issues may make the headlines, one hallmark of Chris Lucas's tenure as CFO has been a string of small, value-accretive, bolt-on retail acquisitions. Today's announcement of the purchase of the ING Direct UK business (at a discount) is a continuation of this trend - adding £10.9bn deposits, £5.6bn mortgages, 750 staff and 1.5m customers," said analyst Ian Gordon.

The broker notes that the purchase will have no impact on Barclays's core tier-1 capital and will be immediately accretive to the return on equity. "The process of evolution, not revolution, continues apace," Gordon said.

"While the selective acquisition of distressed Lehman assets in 2008 may go down in history as the most daring, opportune and immediately value accretive transaction of all, Barclays's disciplined but committed approach to opportunities in the retail space is acting as a particularly useful source of sustainable value accretion."

Gordon admits that the acquisition will probably not prove transformational but reflect "another small step on the road back to fair value".

Trading at 0.6 times tangible net asset value (tNAV), Barclays is marked as a 'buy'. Investec says it trades at a small but unwarranted discount to sector peer Lloyds, which it labels a 'hold'.

Barclays was trading down 0.17% at 221.96p in mid-morning.

BC

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