A possible merger between Barclays Capital and ABN Amro is the fixed-income investment banking relationship that everyone is talking about, mainly because of the debt capital markets growth that the latter has achieved in the last decade. ABN Amro is now the type of firm that Barclays strove to evolve away from, observers said, which means a merger could present a case of turnaround deja vu for the English bank.

Last week, the two investment banks' parent companies confirmed exclusive preliminary discussions about a potential merger. Market participants said there is little overlap between the two banks' term ABS businesses. Barclays Capital finished 2006 as the top lead manager on auto and credit card ABS debt, and placed sixth among lead underwriters for home equity loan issuance, said Alistair Smith, a spokesman for Barclays. New York-based managing director Michael Wade leads the bank's term ABS business.

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