London: Barclays Plc president Robert Diamond said he is “very confident” about the UK company’s talks to buy ABN Amro Holding NV, the biggest Dutch bank.
“We are in a strong position,” Diamond told reporters on 27 March at a financial-services conference organized by Morgan Stanley in London. Barclays chief executive officer John Varley and Diamond have had “terrific meetings with shareholders”.
Barclays, the third-largest UK bank, had said on 20 March that it agreed on some merger terms with ABN Amro for what would be the world’s biggest financial-services takeover.
Merrill Lynch & Co. analyst Guy Moszkowski wrote in a report on 26 March that speculation about an alternative bid by the New York-based Citigroup Inc. would be justified because of a “good fit”.
“We are focused on value,” said Diamond. Barclays shares fell 2% to 727 pence at 11:50am in London. Shares of ABN Amro rose 0.1% at 32.77 euros in Amsterdam, valuing the Dutch bank at 62.6 billion euros (Rs3.6 lakh crore).
A deal with ABN Amro would help London-based Barclays extend retail banking outside the UK to Italy, the US and India and build its securities, asset—and wealth-management units.
The banks last week agreed that the new company would be based in Amsterdam, ABN Amro’s home city, and that Barclays would appoint the CEO and ABN Amro the chairman.
“Even if they come up with an agreement, the question is whether someone else is going to want to come in at a higher price,” said Colin Morton, a fund manager at Rensburg Sheppards Plc in Leeds, England.
He helps manage about $1.8 billion of stock, including Barclays. “Until we see the details of the deal, it is difficult to take a view,” he said.
Barclays’ biggest shareholders are Lloyds TSB Group Plc., which oversees a 5.3% stake, Legal & General Group Plc., and Barclays employee benefit trusts, Bloomberg data shows.
Citigroup, the biggest US financial-services company, would have to pay about $85 billion to $90 billion, about a third of its market value, to foil Barclays’ approach, analyst Moszkowski wrote. Citigroup could cut 12% of the costs and would benefit from ABN Amro’s Brazilian unit and LaSalle retail bank in Chicago, where “Citi’s presence is weak”, he wrote.
“We would not rule out an approach, even though there are obstacles beyond the obvious messiness of trying to break up friendly negotiations,” wrote Moszkowski, a former Citigroup employee who is the No. 1 US brokerage analyst according to Institutional Investor’s annual survey. He has a “buy” rating on the Citigroup stock.
Shares of Barclays have risen 6.5% since 16 March before speculation about a takeover began, valuing the bank at £47.5 billion (Rs4.04 lakh crore). ABN Amro shares have surged 20%.