Barclays is in exclusive talks about a takeover of ABN Amro which would rescue the Dutch bank from a campaign by activist investors and create one of the world's biggest financial institutions.
ABN Amro executives last night agreed to enter into a period of exclusive talks with Barclays after weekend discussions. A deal would be Europe's biggest cross-border financial services merger and would transform the continent's banking landscape.
A combination of Barclays and ABN Amro would create a financial institution with a market capitalisation of more than £80 billion. It would combine ABN Amro's spread of operations - which includes banks in Brazil, the US, the Middle East and Asia - with Barclays' presence in fund management, investment banking and credit cards.
A deal could also help Barclays, which has long been rumoured as a takeover target for big US financial institutions, to break into the top league of the world's largest banks.
ABN Amro and Barclays have talked about a deal at least three times over the past seven years. But the most recent discussions have been given increased urgency by a campaign by the Children's Investment Fund, the activist hedge fund which has won support from investors for a break-up or sale of ABN Amro. TCI is expected to put several motions to ABN Amro's shareholders at the end of April.
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