Page 11 - RBS – ABN takeover

each bid in the balance because of the size of their stake in both RBS and

Barclays. Royal Bank's cost-to-income ratio was 42.1 percent in 2006, compared

with 59 percent at Barclays. In the end, they leaned towards the RBS bid

because Sir Fred had a more successful record at integrating deals than John

Varley CEO of Barclays.

In July, the Dutch Supreme Court ruled that ABN's sale of LaSalle was lawful -

overturning the lower Superior Court’s move blocking the sale.

Barclays' sense of having turned the tables on the RBS Consortium was short

lived as RBS made a formal counter bid in July. ABN's management who had

initially thrown their weight behind the Barclays bid, which would have

substantially left ABN intact, now withdrew its support, calling for a "level-playing

field" between both bidders but Groenink still managed to recommend to his

shareholders that they reject the consortium bid. Sir Fred, after being repeatedly

rebuffed in his requests to meet the ABN management, said, "I don't think we

are going to get a level playing field, just a playing field." Groenink was

subsequently removed from the bidding process.

By now, late July, Varley knew he had a fight on his hands. He brought in two

investors to add a cash element to the deal, but even the might of the China

Development Bank and the Singaporean government investment fund, Temasek

were unable to boost the bid sufficiently. Barclays' offer rose to €67.5 billion

(£46.7 billion) with a 37 per cent cash element. The result was an offer from

Barclays that fell almost £7bn short of its rival.