Page 12 - RBS – ABN takeover

In early August, a further blow landed as the global financial markets came under

increasing pressure, sending Barclays' shares critically downwards.

Third Largest UK Bank

Central to Barclays' strategy had been Varley's

aggressive international expansion, both through organic growth, as seen at

investment-banking arm Barclays Capital, and the acquisition of a majority stake

in South Africa's ABSA in 2005 for around $5.5 billion.

The rationale of the Barclays-ABN Amro bid was to support Varley’s vision of

Barclays becoming a universal bank rather than that of cost synergies. This

meant offering a full range of retail and wholesale services to customers and

clients throughout the world. These services would include: retail, business and

private banking, credit cards, investment banking, investment management and

wealth management. Consequently, when ABN became available Barclays were

obliged to contemplate their acquisition.

With ABN, Barclays would have entered faster-growing consumer markets

outside Britain. The Dutch bank had 4,500 branches in 53 countries, including

the U.S., India and Brazil.

It was likely that the main executive direction of the combined entity would be

driven by Barclays' management. In return, the head office of the combined bank

would be located in Amsterdam, with the Dutch Central Bank, rather than the

U.K.'s Financial Services Authority, likely to be the lead regulator.