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Barclays agrees £45bn Dutch deal Barclays agrees £45bn Dutch deal
(10 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 £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 £45bn (66bn euros; $90bn) deal will create one of the world's largest banks, with combined value 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 a 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.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.
'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 was in exclusive negotiations with ABN Amro until Friday but the Dutch bank said it would open discussions with RBS on Monday.
I think Barclays may have played their hand already David Cumming, Standard Life Investments href="http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/shares/3/23144/intraday.stm">See Barclays shares I think Barclays may have played their hand already David Cumming, Standard Life Investments href="http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/shares/3/23144/intraday.stm">Barclays' share price
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 the Spanish bank Group de Santander, which owns Britain's Abbey bank, and the Belgian bank Fortis.
Barclays chief executive John Varley - who would 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 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 AmsterdamPROPOSED 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 enlarged group would have 47 million customers, including 27 million credit card holders.
The deal is likely to result in a significant reduction in the two firms' combined workforce of about 217,000. 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.
But the firms stressed that they expected most of the job losses to be achieved through natural wastage.
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 as part of the deal.
Its shares rose 1.4% to 761 pence in early trading in London.Its shares rose 1.4% to 761 pence in early trading in London.
Rival proposalRival proposal
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.