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Barclays agrees £45bn Dutch deal Barclays agrees £45bn Dutch deal
(30 minutes later)
Britain's Barclays bank has agreed to merge with Dutch bank ABN Amro.Britain's Barclays bank has agreed to merge with Dutch bank ABN Amro.
The deal will create one of world's largest banks, with sales of about £45bn ($90bn; 66bn euros) and its global headquarters in the Netherlands. The £45bn (66bn-euro; $90bn) deal will create one of the world's largest banks, with combined sales of £94bn and 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.
ABN has also agreed to talk to another consortium headed by the Royal Bank of Scotland (RBS) about a rival offer.ABN has also agreed to talk to another consortium headed by the Royal Bank of Scotland (RBS) about a rival offer.
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.
'Unique opportunity''Unique opportunity'
Barclays had been in exclusive negotiations with ABN Amro until Friday but the Dutch bank said it would open discussions with the RBS on Monday.Barclays had been in exclusive negotiations with ABN Amro until Friday but the Dutch bank said it would open discussions with the RBS on Monday.
I think Barclays may have played their hand already David Cumming, Standard Life InvestmentsI think Barclays may have played their hand already David Cumming, Standard Life Investments
Royal Bank's partners include Spanish bank Group de Santander, which owns Britain's Abbey bank and Belgian bank Fortis. Royal Bank's partners include Spanish bank Group de Santander, which owns Britain's Abbey bank, and Belgian bank Fortis.
Barclays chief executive John Varley - who will head the combined business- described the deal as a "unique opportunity". Barclays chief executive John Varley - who would head the combined business- described the deal as a "unique opportunity".
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.
"The proposed merger will significantly enhance stand-alone product development capabilities and distribution," he said."The proposed merger will significantly enhance stand-alone product development capabilities and distribution," he said.
"Our combined geographic reach will ensure exposure to both developed and high growth developing economies." "Our combined geographic reach will ensure exposure to both developed and high-growth developing economies."
PROPOSED NEW COMPANY 47 million customers27 million credit card holders217,000 staffSales of £94bnBritish firmHeadquartered in Amsterdam
The proposed deal, which must be approved by shareholders of both firms and regulators, 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 shareholders of both firms and regulators, would see Barclays shareholders owning 52% of the enlarged Barclays Group and ABN Amro investors owning the remainder.
Under the terms of the deal,
The deal is likely to result in a significant reduction in the two firms' combined workforce of about 217,000.The deal is likely to result in a significant reduction in the two firms' combined workforce of about 217,000.
But the firms stressed that they expected most of job losses to be achieved through natural wastage. But the firms stressed that they expected most of the job losses to be achieved through natural wastage.
Rival proposalRival proposal
But one analyst said it was far from certain that the Barclays deal would be successful. One analyst said it was far from certain that the Barclays deal would be successful.
"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.Mr Cumming said the RBS consortium could offer a higher price because their proposal would guarantee more cost savings.
"I expect them to be favourites in the end," he said."I expect them to be favourites in the end," he said.
Independent of the Barclays deal, ABN Amro has said it will sell LaSalle, its US business, to Bank of America for $21bn. Independent of the Barclays deal, ABN Amro has said it will sell LaSalle - its US business - to Bank of America for $21bn.