Barclays in merger talks with ABN bank

Dutch bank ABN Amro and British bank Barclays are in exclusive talks for a possible $160-billion merger that would be Europe’s biggest financial services deal, they said Monday.

Shares in ABN Amro hit a record high earlier Monday after sources familiar with the matter said Barclays had approached ABN Amro with a merger blueprint.

The two banks said they were in “exclusive preliminary discussions” concerning a merger. They said the talks were “exploratory.”

“These discussions are the result of careful consideration to create a highly complementary partnership,” they said.

Barclays, Britain’s third-biggest bank, has a big presence in Europe and Africa. ABN, the Netherlands’ biggest bank, also owns large retail banks in the United States, Brazil and Italy.

Analysts said they were a good fit strategically and geographically, but the lack of overlap limited potential cost savings and meant other banks could swoop in for ABN.

Several other banks, including Dutch rival ING, Spain’s BBVA and France’s BNP Paribas, have expressed interest either in a full merger with ABN Amro or in buying some of its large non-Dutch businesses.

A source familiar with the matter said ABN entered talks with Barclays after studying proposals it had received from several European banks. It chose to enter exclusive talks to prevent an out-and-out auction, the source added.

ABN has come under pressure from investors, including British hedge fund TCI, to consider a sale or breakup to boost shareholder returns after several years of underperformance.

TCI declined to comment Monday.