Banking probe to stymie ABN - Barclays merger

10 April 2007

An investigation into dealings at Dutch bank ABN Amro could put the future of its proposed merger with Barclays Bank in doubt, according to recent reports.

According to reports in the Wall Street Journal, the probe from the US Justice Department hinges on money transfers made by the Dutch bank.

However, with only two weeks remaining before the deadline for the merger and the end of exclusive talks between the two banks, it is thought that Barclays is keen to get the matter resolved and to avoid a criminal investigation.

The investigation into ABN's affairs comes after the Justice Department imposed fines of $80 million in 2005 after the bank was allegedly linked to a series of money transfers to individuals in the US from Iranian and Libyan clients.

After that scandal the Dutch bank had promised to tighten its practices to prevent recurrence.

Should the deal between the banks go through it would represent the largest-ever cross-border transaction and create a bank with a market capitalization estimated at $80 billion.

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