ABN gives Barclays and RBS more time

By NICK GOODWAY FOR MAILONLINE
Updated:

 

ABN Amro, the Dutch bank being stalked by two British banks, is expected shortly to extend its exclusive talks with Barclays over an £85bn merger while telling a consortium including Royal Bank of Scotland that it must provide more information on its break-up plans.

The announcement, which could come late today or tomorrow, would give Barclays extra time to put the finishing touches to its deal as its original 30-day period of exclusivity expires tomorrow.

But ABN, which next week faces the wrath of some of its shareholders at its annual meeting in The Hague, will not slam the door in the face of the consortium made up of RBS, Santander and Fortis.

It is unlikely to open its books to the three banks but will instead ask them for more detail on what they will offer ABN investors in terms of a mixture of cash and their own shares.

It is now thought Barclays will not be ready to go with its merger terms until early next week rather than by the end of this week. That brings it ever closer to ABN's meeting on 26 April, where it is battling against five resolutions from The Children's Investment Fund calling for it to be sold or broken up.

It is still believed that Barclays and ABN have to get final clearance from European regulators and finalise price terms of the deal.

ABN shares rose almost another 1% to e35.86 today as investors weighed up the likely success of Barclays versus the tentative approach from the three European banks.

JPMorgan analysts said there were three scenarios now.

They put a 60% probability on RBS, Santander and Fortis winning with a bid worth e38 a share, which they say the three banks could afford without damaging their earnings. Barclays now has a 30% chance of success, assuming it could stretch its bid to e35 a share, they say.

The chances of ABN remaining independent are now just 10%, which JPMorgan reckons would make its shares worth just e28.

Keefe, Bruyette & Woods is more optimistic about Barclays' chances saying 'it is highly likely that Barclays and/ or ABN has been approached by parties interested in buying part of ABN.

'It is also highly likely that its combination with other parties will be able to match any structure and synergies proposed by RBS.'

A Reuters poll of 11 banking analysts came up with an average price of e34.60, which they expect Barclays to pay.

That would value ABN at e66bn (£45 billion), which would make it the largest-ever takeover of a bank.

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