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Barclays versus RBS, Santander and Fortis

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  1. Timeline.
  2. Overview of banks involved.
    1. ABN Amro.
    2. Barclays.
    3. The banks.
  3. Motivations for a merger.
    1. ABN Amro.
    2. Barclays.
    3. The banks.
    4. Bank of America.
  4. Deal structure.
    1. ABN Amro/Barclays.
  5. Constraints.
    1. ABN Amro/Barclays.
    2. ABN Amro/'The Banks'.
  6. Strategy and potential developments.
  7. Backward looking statements.
    1. Where did it all go wrong?
  8. Forward looking statements.
    1. Options available to ABN Amro.
    2. Options available to Barclays.
    3. Options available to RBS, Santander and Fortis.
  9. References.

ABN Amro bank comes from the merger between two Dutch banks Algermene Bank Netherlands N.V. and Amsterdam Rotterdam Bank N.V. in 1991. ABN Amro's strategic focus is on consumer and commercial clients in local markets and on corporations and financial institutions in the global market. Currently it is ranked as the eighth largest bank in Europe and the thirteenth in the world. It has five Business Units world wide: Netherlands, Europe, Asia (special focus in China, India, Pakistan, Singapore and Indonesia), North America and Latin America. In 2006 it acquired Antonveneta, the ninth Italian bank according to its number of clients. In 2005 it acquired the Belgian Bank Corluy and in 2004, the Frankfurt based Bethmann and Munich based Maffei.
ABN Amro is based in the Netherlands and adheres to the Dutch Corporate Governance Code. It is listed in Amsterdam, Brussels, Paris, and New York exchanges. On March 17th 2006 it was removed from the London Stock Exchange, and announced in January 2007 that it will also delist from Euronext Brussels and Euronext Paris. It is also registered in the US Securities and Exchange Commission (SEC).
In the New York Exchange the shares are American Depositary Shares represented in American Receipts (ADR) which are equivalent to an ordinary share. On the other hand, the preference shares are listed in Euronext Amsterdam. After a study made in December 2006, 78.1% of the ordinary shares in ABN Amro Holding N.V were identified; of which institutional investors held 87.3% and retail investors held 12.7%. Benelux institutional investors owned 15% of the outstanding ordinary shares. The major holders of depositary receipts of preference shares are: ING Groep N.V. (21,29%); Aviva plc (17,48%); Fortis Utrecht N.V. (16,85%); Kempen Capital Management Ltd (15,02%); Aegon N.V. (14,33%); and Euroko B.V. (12,12%). The depositary receipts of preference shares are issued by the Trust Office (non-membership organization), who holds 100% of the outstanding preference shares, but only has 1.58% of voting power of all the issued capital.

[...] The proposal brought forward by RBS, Santander and Fortis consists in the acquisition of ABN Amro as a whole in order for it to subsequently be divided among the three banks. The consortium claims that their bid offers maximum value to shareholders because the business of their subsidiaries overlaps with that of ABN Amro in their respective markets, which means that the potential for cost cuts would be much greater than in the case of an eventual merger with Barclays, whose intention is to keep the bank intact. [...]

[...] The bid by RBS, Santander and Fortis clearly offers the highest material benefits on the short term. However, it is up to ABN shareholders to explore where their most lucrative future lies. They must thus demand further information from both parties, particularly concerning the ability of Barclays to fully integrate all the new parts and deliver on cost synergies and how exactly the RBS consortium plans to finance its offer. Options available to Barclays For Barclays to convince ABN Amro that theirs is the most lucrative deal they may have to consider sweetening their offer. [...]

[...] Barclays is listed on the London Stock Exchange, Tokyo Stock Exchange and New York Stock Exchange banks? Royal Bank of Scotland The Royal Bank of Scotland (RBS) is a holding company based in Edinburgh, Scotland and listed on the London stock exchange. It is the largest banking group in Scotland and the second largest in the UK. It has operations located in Europe, North America and Asia. It owns Citizens Financial Group in the US. In August 2004, it acquired a 10% stake in the Bank of China. [...]

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