U.S. News

Barclays to Confirm ABN Merger Talks: Papers


Britain's Barclays is expected to confirm on Monday it is in preliminary merger talks with ABN AMRO Holding, British newspapers reported.

Sources familiar with the matter told Reuters on Sunday Barclays was one of several banks that had approached ABN AMRO in recent weeks after activist shareholders publicly pushed for a sale or breakup of the Dutch lender.

Dutch rival ING, Spain's BBVA and France's BNP Paribas have also expressed an interest -- directly or through advisers -- in either exploring a full merger with ABN AMRO or buying some of its large non-Dutch businesses, the sources said.

Amsterdam-based ABN AMRO owns large retail banks in North America, Brazil and Italy and the activist investors, which include British hedge fund TCI, have said it should consider a sale or breakup to boost shareholder returns.

Any talks being held by ABN AMRO with other banks are at a very early and uncertain stage, the sources added.

An announcement from Barclays, Britain's third largest bank, was expected in a statement to the London Stock Exchange, the Financial Times reported. The Times and Daily Telegraph also expected such news, while the Independent said both ABN AMRO and Barclays were set to confirm their early-stage talks.

Barclays has approached ABN AMRO with a merger plan that would create a global bank worth 80 billion pounds (US$156 billion), the sources told Reuters, confirming weekend newspaper reports. The Sunday Times said Barclays was "keen to act as a white knight to save ABN from its current problems".

The British bank was by no means along, however. "The whole world has approached ABN AMRO since TCI's statement," said one of the sources.

Another source said ABN has reached no decision on how to proceed and a quick deal before a shareholder meeting being held next month was unlikely unless the bank was made a hugely compelling offer in the meantime by one of its suitors.

Spokespeople for Barclays, ABN AMRO and BBVA declined to comment on Sunday.

Many industry analysts and bankers regard ABN as being ripe for a sale or breakup. However sources familiar with the matter told Reuters earlier this month that ABN AMRO was also considering other options such as selling stakes in foreign investments and boosting existing restructuring plans to return more cash to shareholders.

TCI, which was part of a group of activist investors that torpedoed Deutsche Boerse's takeover bid for the London Stock Exchange in 2005, in February said ABN was significantly undervalued and called on it to merge, sell or spin off some of its assets or potentially the whole business.

Paul Kaju, a spokesman for TCI, was quoted on Monday as telling London's CityAM newspaper after news of the Barclays approach broke: "If a merger will unlock the group's undervalued assets then fine, yes, we would support that."