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Barclays agrees £45bn Dutch deal Barclays agrees £45bn Dutch deal
(about 1 hour later)
Britain's Barclays bank has agreed to merge with Dutch bank ABN Amro in a deal worth £45bn (66bn euros; $90bn).Britain's Barclays bank has agreed to merge with Dutch bank ABN Amro in a deal worth £45bn (66bn euros; $90bn).
The move will create one of the world's biggest banks, valued at £94bn and with its headquarters in the Netherlands.The move will create one of the world's biggest banks, valued at £94bn and with its headquarters in the Netherlands.
The companies said about 12,800 jobs would be cut as a result of the merger, while a further 10,800 jobs would be moved to low-cost locations.The companies said about 12,800 jobs would be cut as a result of the merger, while a further 10,800 jobs would be moved to low-cost locations.
A rival group led by the Royal Bank of Scotland (RBS) may also make a bid but has delayed a meeting with ABN Amro.A rival group led by the Royal Bank of Scotland (RBS) may also make a bid but has delayed a meeting with ABN Amro.
Bidding war?Bidding war?
The consortium, also including Spanish bank Santander - which owns the UK's Abbey - and Belgian bank Fortis, had planned to discuss its proposals with ABN Amro bosses on Monday.The consortium, also including Spanish bank Santander - which owns the UK's Abbey - and Belgian bank Fortis, had planned to discuss its proposals with ABN Amro bosses on Monday.
But it cancelled the meeting pending more details about ABN Amro's planned sale of its US arm LaSalle to Bank of America for $21bn - also announced on Monday - which RBS opposes. But it cancelled the meeting pending more details about ABN Amro's planned $21bn sale of its US arm LaSalle to Bank of America - also announced on Monday - which RBS opposes.
PROPOSED NEW COMPANY 47 million customers27 million credit card holders217,000 staffSales of £94bnUK-owned firmHeadquartered in AmsterdamPROPOSED NEW COMPANY 47 million customers27 million credit card holders217,000 staffSales of £94bnUK-owned firmHeadquartered in Amsterdam
Some analysts believe that RBS will offer a higher price for the Dutch bank, paving the way for a bidding war.Some analysts believe that RBS will offer a higher price for the Dutch bank, paving the way for a bidding war.
The BBC's Business Editor Robert Peston said the Barclays offer faced major obstacles in the form of the rival consortium and the need to secure regulatory approval in 70 countries.The BBC's Business Editor Robert Peston said the Barclays offer faced major obstacles in the form of the rival consortium and the need to secure regulatory approval in 70 countries.
Barclays and ABN stressed that they expect most of the cuts to their 217,000 workforce to be achieved through natural wastage. Barclays and ABN said they expect most of the cuts to their 217,000 workforce to be achieved through natural wastage, the majority coming in the UK, Spain and Italy.
I think Barclays may have played their hand already David Cumming, Standard Life Investments class="" href="http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/shares/3/23144/intraday.stm">Barclays' share price Barclays chief executive John Varley - who would head the combined business - described the deal as a "unique opportunity". British unions said they would seek assurances from Barclays that it would not impose any compulsory redundancies.
The firm said it was not concerned about any rival offer and was focusing instead on the "growth opportunities" offered by its proposals. "We have every confidence that this process of change can be managed through our existing job security agreements," said an official from Amicus.
"The proposed merger will significantly enhance stand-alone product development capabilities and distribution," he said. I think Barclays may have played their hand already David Cumming, Standard Life Investments class="" href="http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/shares/3/23144/intraday.stm">Barclays' share price
"Our combined geographic reach will ensure exposure to both developed and high-growth developing economies." Barclays said it was not concerned about any rival offer and was focusing instead on the "growth opportunities" offered by its proposals.
"The proposed merger will significantly enhance stand-alone product development capabilities and distribution," said its chief executive John Varley.
The enlarged group would have 47 million customers, including 27 million credit card holders.The enlarged group would have 47 million customers, including 27 million credit card holders.
Regulated in BritainRegulated in Britain
The proposed deal, which must be approved by regulators and shareholders of both firms, would see Barclays shareholders owning 52% of the enlarged Barclays Group and ABN Amro investors owning the remainder. The proposed deal, which must be approved by regulators and shareholders, would see Barclays shareholders owning 52% of the enlarged Barclays Group and ABN Amro investors owning the remainder.
Barclays would continue to be regulated and pay tax in the UK as part of the deal. Barclays would continue to be regulated and pay tax in the UK.
There could be a spate of cross border takeovers within Europe Robert Peston, BBC business editor Read Robert's analysis in fullThere could be a spate of cross border takeovers within Europe Robert Peston, BBC business editor Read Robert's analysis in full
Barclays shares were down 2.5% in afternoon trading in London after the terms of the deal were announced.Barclays shares were down 2.5% in afternoon trading in London after the terms of the deal were announced.
One analyst said it was far from certain that the Barclays deal would be successful. One analyst said it was far from certain Barclays would be successful, as the RBS consortium may offer a higher price since its proposal would guarantee more cost savings.
"I think Barclays may have played their hand already," David Cumming from Standard Life Investments told the BBC. "I think Barclays may have played their hand already," David Cumming, from Standard Life Investments, told the BBC.
Mr Cumming said the RBS consortium could offer a higher price because their proposal would guarantee more cost savings. "I expect them [Royal Bank of Scotland] to be favourites in the end," he said.
"I expect them to be favourites in the end," he said.