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The Independent: Investor fears at Barclays bid for Dutch rival

By Danny Fortson and Tim Webb
Published: 25 March 2007

Major investors in Barclays have publicly questioned the logic of the planned £80bn takeover of ABN Amro. If John Varley, the chief executive of Barclays, succeeds in taking over the bank’s Dutch rival, the deal would be the largest ever in the financial services industry.

It would create one of the world’s largest consumer and investment banking groups, with operations in Europe, the Americas and the Middle East.

But investors have expressed grave doubts about whether the tie-up would lead to a devaluation of their holdings or even if such a tie-up makes business sense.

Richard Marwood, a fund manager at Axa Investment Managers and holder of Barclays shares worth £502m or just over 1 per cent, said: “You could mesh the investment banking operations of the two banks together, but other than that it’s not clear to me what the other cost savings from a merger are. The area that worries me the most is Barclays effectively turning itself more into an international, diversified banking group like RBS or Citigroup. Rightly or wrongly, these are not the flavour of the month with the equity markets. Such a combined entity would more likely attract a downward rather than upward re-rating.”

Steve Thornber, a fund manager at Threadneedle Investments, owner of £461m in Barclays stock, questioned the concessions that Barclays has made to ABN in a bid to seal a deal, including allowing the chairman of the group to be Dutch.

“We have to be confident that Barclays management would have full control to restructure assets and run the business as they choose,” said Mr Thornber. “Our strong preference, given the history of Anglo-Dutch mergers that haven’t been good for shareholders, would be that this kind of dual management structure be avoided.”

Anglo-Dutch mergers have an unhappy history, including Royal Dutch Shell, Unilever and Reed Elsevier, leading to unwieldy management structures and sagging stock prices.

Neither of the investors quoted above said they had spoken to advisers at Barclays, though the bank is understood to be in contact with major shareholders. The companies last week entered 30 days of exclusive talks after news of the takeover leaked. Barclays is expected to begin due diligence in earnest this week.

The discontent among Barclays shareholders comes amid increasing speculation that Royal Bank of Scotland (RBS) could launch a rival bid for all or part of ABN Amro.

Analysts have also mentioned French bank BNP Paribas, HSBC and Citigroup, as well as Spanish banks BBVA and Abbey National owner Santander, as other possible counter-bidders.

RBS chief executive Sir Fred Goodwin declined last week to rule the bank out of making an offer. Analysts estimate that RBS could extract more synergies out of a deal than Barclays. and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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