Nov. 5 (Bloomberg) -- Four years after an injury cut short his dream of scaling the world’s highest mountain, Mark Warham was within 3,000 feet of the summit of Mount Everest. It was 11:30 at night when he and his companions began their final push through the darkness.

“I’d made good time, arrived fairly early in the morning, and the weather was set fair, so I allowed myself half an hour to enjoy,” Warham, Barclays Plc’s co-head of European mergers and acquisitions, said, recalling that moment in 1997. “We had a little bad weather on the way, but on summit day you could see for hundreds of miles.”

Warham, 47, and his partner at Barclays, Matthew Ponsonby, now face another steep climb, this time against Citigroup Inc., Morgan Stanley and Deutsche Bank AG, the leaders in the European takeover business. Warham and Ponsonby, 44, recruited this year to head Barclays’s start-up M&A operation in Europe, are looking up at the competition, where the bank is ranked 11th in the European M&A advisory business. Making the job even tougher: The pace of mergers remains 56 percent below its $3.2 trillion peak of 2007, according to data compiled by Bloomberg.

“It’s a test of the bank’s mettle to see if they’re going to panic at two quarters worth of low M&A activity or whether they really are taking a 10-year view,” said Mike Trippitt, a London-based analyst at Oriel Securities Ltd. who has a “buy” rating on Barclays’s stock.

Robert Diamond

Barclays shares fell 1.4 percent to 332.35 pence in London trading today. The stock has more than doubled this year, for a market value of about 37.9 billion pounds ($62.8 billion).

Barclays’s acquisition last year of the North American assets of Lehman Brothers Holdings Inc. propelled the bank to seventh place among U.S. takeover advisers this year, up from 71st in 2007, Bloomberg data show. Barclays President Robert Diamond says he wants the London-based bank to be one of the world’s top three investment banks.

The U.K.’s second-biggest lender is returning to a business it abandoned 12 years ago when it sold Barclays de Zoete Wedd’s unprofitable European equity and mergers advisory unit to Credit Suisse AG to focus on bonds, loans and foreign exchange.

In Europe, where Lehman’s operations were sold to Nomura Holdings Inc., Warham and Ponsonby are almost starting from scratch. Citigroup, Morgan Stanley and Deutsche Bank advised on an average of $367 billion in deals in the first 10 months of the year. Barclays’s deals amounted to one-tenth of that, or $33.8 billion, the data show.

Barclays Capital this year advised on takeovers valued at about $164 billion worldwide, only a fifth of which were European transactions, according to data compiled by Bloomberg.

EdF, Anheuser-Busch

Warham and Ponsonby were hired to fix that. Barclays Capital plans to add as many as 35 takeover advisers in the region this year, roughly doubling the team of about 30 emerging markets bankers it took from ABN Amro Holding NV last year.

In Europe this year, Barclays advised London Stock Exchange Group Plc, Electricite de France and the world’s largest brewer, Anheuser-Busch InBev NV.

“We have an effective team now on the ground in Germany, France, Spain and Italy,” Ponsonby said in an interview. “We have the largest team based in London both to cover the U.K. and also to serve our clients in Scandinavia and the Netherlands.”

Barclays’s ability to arrange financing is one of the bank’s strengths that will set it apart from competitors, Warham said. Simon Willis, a London-based analyst at NCB Stockbrokers, agrees: After Lehman’s collapse caused a drought in bank lending, bond sales by companies have surged, he said.

‘Large-Scale Financings’

The bank is the number one underwriter of international bonds, with 8 percent of the global market share, and one of the top three underwriters of investment-grade corporate Eurobonds, along with Royal Bank of Scotland Group Plc and BNP Paribas SA.

In February, Barclays Capital helped Swiss drugmaker Roche Holding AG raise $15.8 billion to acquire U.S. biotechnology firm Genentech Inc.

“It is clearly helpful to our clients that we can support large-scale financings,” Warham said. “Barclays Capital is able to leverage an integrated bond, loan and equity platform to provide comprehensive financing solutions.”

Barclays’s clients will seek merger advice as a “natural extension” of the financing help, Ponsonby added.

Paul Parker

Warham, who came to Barclays Capital in June, was most recently chairman of U.K. investment banking and a former U.K. M&A chief at Morgan Stanley, where he’d worked since 2000. He also served as director general of Britain’s Takeover Panel in 2006-2007.

Ponsonby joined Barclays in September from Citigroup, where he worked for 11 years, most recently as global co-head of infrastructure investment banking. His 19 years in banking include eight at Deutsche Morgan Grenfell before Citigroup.

Along with Ponsonby and Warham, who report to Paul Parker, head of global M&A in New York, Barclays’s European mergers unit has also added Citigroup’s Mark Todd, Inigo Paneda from Nomura and former Credit Suisse Group banker Philippe Deneux this year.

“As long as you hire the right two or three guys at the top, it doesn’t matter if it takes you a year, two or three years to do it, you’re well placed,” said Willis, who rates the stock a “buy.” “Barclays has a once-in-a-lifetime window of opportunity now.”

To contact the reporter for this story: Poppy Trowbridge in London at ptrowbridge@bloomberg.net

Last Updated: November 5, 2009 12:15 EST