Reuters: Barclays and ABN to split top jobs

LONDON (Reuters) – Barclays (LSE: BARC.L – news) and Dutch rival ABN AMRO (Amsterdam: AABA.AS – news) said a merger of their companies would be listed in London, have headquarters in Amsterdam, and would split the top two jobs.

Barclays Chief Executive John Varley is set to take the same job in a combined bank, and ABN’s Rijkman Groenink would probably be chairman under the proposals.

Barclays and ABN on Tuesday outlined a framework of objectives they aim to reach agreement on, including using the Dutch Central Bank as lead regulator and having a UK board and governance and management structures.

The banks are in exclusive discussions about creating a company worth more than $160 billion (81 billion pounds), which would represent Europe’s biggest ever financial services deal. If agreed it would likely see Barclays pay more than $80 billion for its rival, mostly or all in shares, analysts said.

The two aim to agree a tie-up within 30 days, sources close to the matter said on Tuesday.

The framework outlined would be similar to that of oil major Royal Dutch Shell (Amsterdam: RDSA.AS – news) , which is also incorporated in the UK and headquartered and tax-based in the Netherlands.

The primary listing will allow the combined bank to be included in the FTSE 100 (news) share index < .FTSE>, which was the motive for Shell (LSE: RDSB.L – news) ‘s structure.

Shares in both banks jumped during the day as investors welcomed the strategic logic behind the deal and also the prospect that either could attract other takeover offers if the talks fail.

ABN shares closed up 3.5 percent at 31.00 euros, after hitting an all-time high of 31.33, to value it at about 59 billion euros (40 billion pounds).

Barclays shares jumped 3.7 percent to 702 pence, valuing it at more than 46 billion pounds.

COUNTERBIDS?

Analysts said Barclays appeared to be making some concessions to ABN, which may reduce the need for it to offer a lofty premium and showed it was not dictating terms on the deal.

Despite a change of headquarters, the UK bank would stay at its main London building in the Canary Wharf financial district, a source said.

The plan to tie a deal up within a month would take the talks close to ABN’s annual shareholder meeting on April 26, when it is due to address calls by hedge fund TCI to consider a sale or break-up.

TCI said in a statement before the discussion terms were outlined that it welcomed the talks but hoped it would not prevent ABN considering other offers.

Banks including ING , BBVA (Madrid: BBVA.MC – news) and BNP Paribas (Paris: FR0000131104 – news) have also recently been interested in all or part of ABN, sources have said, and analysts say HSBC , Royal Bank of Scotland (LSE: RBS.L – news) and Santander could all yield higher synergies and pay a higher price for ABN.

Analysts at Keefe, Bruyette & Woods said should Barclays and ABN agree terms — which they estimated would take around two weeks — then “it is highly likely that other bidders will emerge in due course”.

The limited overlap meant ABN and Barclays would make a good strategic and geographic fit, the analysts said.

“The potential transaction is primarily about growth and not about cost savings,” said Mike Trippitt, analyst at Oriel Securities.

The growth opportunity would come from combining the international and commercial banking businesses, while cost savings would mainly come from investment banking, asset and wealth management arms, he said.

Several analysts predicted Barclays is likely to offer between 33 and 35 euros per ABN share.

One top 20 investor in the UK bank said it was likely to get broad investor support.

“If a company has done their due diligence and present a credible argument a vote against an acquisition would be a vote of no confidence in the board. I don’t think you’d see that, that’s usually a pretty extreme issue,” said Stuart Fowler, senior equities fund manager at AXA Investment Management, which holds a 0.8 percent stake in Barclays.

(Additional reporting by Reed Stevenson in Amsterdam and Clara Ferreira-Marques in London)

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