Could a deal with Barclays ( BCS) be the tonic for Bear Stearns ( BSC)?

Both firms have had a rough go of it lately. Last week, London-based Barclays lost its $89 billion bid for ABN AMRO ( ABN) when bidders led by Royal Bank of Scotland won shareholder approval to purchase the Dutch bank.

For its part, Bear Stearns is trying to recover from an embarrassing summer that saw two of its hedge funds collapse under the weight of wrong-way bets on subprime mortgage-backed securities. The firm reported last month that its earnings plunged 61% from a year ago.

It's widely assumed that Bear would love to line up a deep-pocketed partner, if not an outright buyer. Meanwhile, Barclays must be looking to bounce back from its failed play for ABN. So Bear's misery could spell opportunity for Barclays.

"It would be a perfect match," says Richard Bove, banking analyst at Punk Ziegel. "Bear Stearns could use what Barclays brings to Bear."

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Several weeks ago, Bear's shares went on a tear on speculation in The New York Times that the firms was in talks with Warren Buffett and some financial institutions in China about a possible investment. While those rumors were soon dispelled, the market action underscored the fact that Bear investors are keen on the notion of the New York-based bank getting a helping hand.

At a conference Thursday, Bear CEO James Cayne said the firm isn't searching for an outside investor. But he did say Bear would be willing to talk. The critical component of such a matchup, Cayne said, was teaming up with someone that provided a better geographic platform.

That's where Barclays' chief John Varley could enter the scene.

Barclays wants to grab a big retail presence in U.S. On its face, a combination of the big banks makes sense on paper in ways that Barclays' push for ABN Amro did not. After the ABN deal, "Barclays has a black eye -- the only way to recover is do something big and splashy," Bove adds.

At a roughly $18 billion market capitalization, Bear would be a much more palatable purchase for Barclays, which may have seen LaSalle Bank -- later snapped up by Bank of America ( BAC) -- as the crown jewel in its bid for ABN.

Bank of America shelled out $21 billion to acquire LaSalle. Based on Bear's current market cap, Barclays could easily bag Bear Stearns at a 20%-30% premium for between $22 billion and $23 billion -- and that's being generous, since Bear is essentially trading at a roughly 40% premium to its $90 book value, according to Bove.

"And Barclays could say to its shareholders , 'We didn't get that one but this one's better,'" says Bove.

For now, Barclays has plans to repurchase $3.5 billion worth of stock and focus on so-called organic growth, the kind that isn't driven by acquisitions.

But while Bear's exposure in the international market is small compared to its peers, including Goldman Sachs ( GS), Lehman Brothers ( LEH) and Merrill Lynch ( MER), a Barclays/Bear matchup is ripe with cross-selling potential. A deal could mean a stronger combined capital markets and fixed-income group since the expectations are that Bear, much like the rest of banking, will face a shrinking business going forward.

Simon Willis at NCB Stockbrokers in Leeds, England, believes that there is a potential for Barclays to use Bear to help shop its various exchange-traded fund products. "Strategically, you can see why there would be some attraction," Willis says. He adds that otherwise, the big question for Barclays is, "Can they achieve growth to satisfy shareholders?"