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Barclays approaches ABN on $155 bln merger

AMSTERDAM/LONDON - Barclays Plc has approached Dutch bank ABN AMRO with a merger plan that would create a global bank worth 80 billion pounds ($155 billion), UK newspapers reported on Sunday.

The Sunday Times said Barclays approached ABN AMRO, the Netherlands’ biggest bank, after British hedge fund TCI recently called for a merger or a breakup of ABN AMRO.

Contact between the two banks is at an early stage and may not lead to a deal, the Sunday Times said, adding Barclays was ‘keen to act as a white knight to save ABN from its current problems’.

Spokespeople for both banks declined to comment. ‘We don’t comment on market rumours,’ a Barclays spokesman said.

The Sunday Times report, which did not cite sources, said the two banks held serious talks about a merger two years ago. The Sunday Telegraph said the two banks have held talk in the past month.

Many industry analysts regard ABN as being up for sale or breakup.

TCI, which was part of a group of activist investors that torpedoed Deutsche Boerse’S takeover bid for the London Stock Exchange in 2005, in February said ABN was significantly undervalued and called on it to merge, sell or spin off some of its assets or potentially the whole business.

Other investors have also put pressure on ABN’s management for change and British hedge fund Toscafund last month called for it to be taken over after five poor years of performance.

Barclays has made no secret of its plans to expand internationally and in 2006 half its profits came from overseas, up from a quarter in 2004.

Industry analysts have said a combination of ABN and Barclays would make good strategic sense but could be hard to implement. Barclays could be most attracted by ABN’s Dutch, Italian and US retail operations and its Asia business.

Its retail fund management business could also fit well with Barclays Global Investors, although fast-growing Barclays Capital may fit less well with ABN’s investment bank business.