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CNBC's Bartiromo: Barclays May Abandon Bid for ABN Amro

CNBC.com
Sunday, 15 Apr 2007 | 3:19 PM ET

With the Royal Bank of Scotland expressing interest in buying ABN Amro, speculation is growing that Britain's Barclays may abandon its bid for the Dutch bank, CNBC’s Maria Bartiromo reported.

Barclays is due to finalize its bid for ABN next week, Bartiromo said, "but sources tell me there is a chance Barclays will pull out" because of "liability concerns over past money-laundering questions."

Barclays, which has been in exclusive merger talks with ABN since last month, declined to comment.

Earlier Friday, ABN confirmed it had received a letter from Royal Bank of Scotland, Fortis and Spain's Santander, inviting it to start exploratory talks.

"The Managing Board and Supervisory Board of ABN Amro will consider the letter carefully in line with their responsibilities," ABN Amro said in a statement.

However, ABN said it does not plan to open its books to the consortium until it has more details on the newer suitors' plans, sources familiar with the matter told Reuters on Sunday. ABN is concerned about the lack of detail in the letter it received containing the approach as well as the execution risk attached to such a three-way bid.

The bank would want to at least see an indicative price and a structure for the offer before entering into serious talks with its new suitors, the sources told Reuters.

Analyst Says ABN More Valuable to Consortium

One analyst who appeared with Bartiromo on "Closing Bell" said it's ABN's poor management, not so much the money-laundering issue itself, that makes the Dutch bank a bad acquisition.

"When you're talking about banks reaching $2 trillion in size, [a $100 million laundering fine] isn't that much of a deterrent for them to worry about," said Richard Bove, senior financial analyst at Punk Ziegel. "Whoever wins this deal is the loser I guess in my view. Whoever wins this is going to see their stock price go lower and will be mired for maybe six months in difficulty so it’s hard to understand why there will be a battle to pick this thing up.”

Another analyst who appeared with Bartiromo said Barclays would be better off without ABN.

James Ellman, president of financial services hedge fund Seacliff Capital, which owns shares of Barclays Capital, said his firm wants Barclays "to focus on growing the business they already have rather than going out and doing large deals."

"ABN is much more valuable to Royal Bank of Scotland, Santander and Fortis than to Barclays," Ellman said. "Barclays cannot bid as high a price and still make the deal accretive. So at the end of the day, if another bid comes along, I think Barclays will have to walk."

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