Barclays Bank eyes ABN merger

19 March 2007

Barclays Bank has contacted ABN Amro with a view to the two banks merging to create the second-biggest banking group in the world.

The deal is currently at the preliminary stage, but should it go through it would create a bank with a customer base of 47 million, combined assets of $150 billion and would represent Europe's largest cross-border banking transaction.

Barclays' move would fit in with the bank's aim of generating half of its profits from overseas markets by 2008, by giving the British bank greater access to the Asian and Brazilian markets, where ABN Amro has made considerable inroads.

News of the proposed deal comes after a series of shareholders in the Dutch bank, including British hedge funds The Children's Foundation (TCI) and Toscafund, have been lobbying for change from ABN's board following several years of disappointing returns for investors.

TCI called for a break-up of ABN Amro's interests a month ago and since the news broke speculation has been rife that Spanish banks Santander and BBVA will seek to acquire its South American operations.

Meanwhile, Italian bank Capitalia and Royal Bank of Scotland are also perceived to be eyeing developments with a view to acquiring parts of the Dutch bank's overseas divisions.

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