First Thoughts on the Barclays-ABN Deal

A couple of quick thoughts about the news that Barclays has agreed to buy ABN Amro for $90 billion. (I'm in LA for the Milken Institute Global Conference, which is quite exciting, but does mean I have a bit less time for keeping on top of this kind of development.)

1. This is clearly a victory for Barclays CEO John Varley. A few days ago his bid was a presumed failure, and his bank a takeover target. Now he's going to be running one of the biggest banks in the world.
2. Don't believe everything you read in the press. We were told over and over again that Barclays couldn't justify paying more than €35 per share for ABN Amro; in fact, it's paying €36.25.
3. This is clearly a victory for Bank of America CEO Ken Lewis, who managed to keep his name out of all the speculation, only to turn up as the provider of $21 billion in exchange for ABN Amro's US operation LaSalle Bank, and throwing something of a spanner into the works insofar as any rival bid is concerned.
4. Don't believe everything you read in the press. We were told over and over again that Bank of America, despite wanting LaSalle, wasn't allowed to buy it because that would take it over the 10% cap on US deposits. So much for conventional wisdom – it looks as though BofA is just going to do the deal first, and worry about the regulatory implications second. A bit like the Citibank-Travelers merger.
5. Might Barclays hold on to ABN's jewel, Brazil's Banco Real? We all thought that if Barclays won, it would sell Banco Real to help raise cash – but now that cash seems to be coming from Bank of America instead.
6. All that said, ABN isn't sold yet. But it's going to be hard for rivals to come up with a package which can convincingly beat this one, which is all sewn up with a very nice BofA ribbon on top. It looks for the time being as though ABN Amro's CEO Rijkman Groenink has saved his bank from the clutches of Fortis, and I'm sure that he's very happy about that.