After buying South Africa's largest retail bank Absa, Britain's Barclays now proposes to buy Netherland's largest bank ABN Amro for 67billion euros (about R642billion). The merger will create one of the top five global banks by market capitalisation.
The proposed chief executive of the new group, Barclays' chief executive office John Varley, called the deal "the largest merger ever in global financial industry".
Buying ABN Amro will provide Barclays with a strong presence in three more countries - Holland, Italy and Brazil. ABN is also active in the US via LaSalle, which Barclays plans to sell to the Bank of America for $21billion.
ABN has a rival suitor, a consortium including the Royal Bank of Scotland, Spain's Banco Santander Central Hispano and Belgian-Dutch bank Fortis. Despite the agreement, ABN said that it would welcome a meeting with representatives of the rival bidding consortium, but the Royal Bank of Scotland cancelled a meeting yesterday after Barclays' bid was announced.
The new group will be based in Amsterdam and Varley said that he would base himself in the Dutch capital. But the group said it would remain a British "tax resident".
Dutch Finance Minister Wouter Bos, who must approve the deal, said that the merger "would fit in the consolidation that is expected to take place within the European banking sector".
The group said that it expected to see 3,5billion euros in yearly cost savings by 2010.
About 12800 jobs will be trimmed from the combined workforce of 217000, and 10800 others would migrate to cheaper locations. - AP