ABN Amro talks with Barclays

20th March 2007, Comments 0 comments

20 March 2007, AMSTERDAM - ABN Amro and Barclays Bank are holding "exclusive introductory talks" about a merger. Both banks announced this on Monday evening. The talks have been going on for several weeks already, the Financieele Dagblad reports. A merger between the two banks would create the second largest bank in Europe and the fifth largest in the world.

20 March 2007

AMSTERDAM -  ABN Amro and Barclays Bank are holding "exclusive introductory talks" about a merger. Both banks announced this on Monday evening. The talks have been going on for several weeks already, the Financieele Dagblad reports. A merger between the two banks would create the second largest bank in Europe and the fifth largest in the world.

ABN Amro and Barclays said in almost identical statements that the talks are in an "early and exploratory" phase.

The banks say the meetings are the culmination of "careful considerations to create an extremely complementary partnership." The banks stress that it is not certain whether the talks will actually lead to a transaction.

Insiders confirm that the executive boards of the two banks have been in contact about a merger for several weeks.

ABN Amro's share price rose almost 10 percent on Monday to EUR 29.94, its highest point ever, after the news of Barclay's interest in the bank was leaked over the weekend. Barclays lost 0.9 percent, a sign that shareholders are not ready to dismiss a merger with ABN Amro offhand.

The British market regulations require stock market-listed funds to make an announcement of takeover talks if the media reports rumours regarding such talks. This made the publication on Monday necessary.

It is doubtful whether the exclusivity of the talks will stop other interested parties from contacting ABN Amro. Now that it is clear that the bank's leadership is willing to give up its long-cherished independence, many interested parties have emerged.

French banks BNP Paribas and Société Générale, Spanish BBVA and Santander, British Royal Bank of Scotland and ING have all been mentioned. ABN Amro's executive board will have a tough decision if one of them should come out with a bid that is clearly higher than Barclays'.

ABN Amro and Barclays complement each other geographically and operationally, which means that few cost synergies can be achieved. This is why US commercial bank Keefe, Bruyette & Woods put Barclays at the bottom of a list of seven possible buyers. Analysts say the synergies between Barclays and ABN Amro would justify a bid of EUR 31.30 a share. The overlap with a bank like Santander could justify a price of EUR 34.30 a share. These prices do not take strategic considerations into account.

[Copyright Expatica News 2007]

Subject: Dutch news

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