Dutch bank ABN Amro and Britain's Barclays announced yesterday they plan to merge, creating Europe's second-largest bank and the fifth worldwide, shedding thousands of jobs.
The merger would take place via a share swap which will value ABN Amro at 67 billion euros (US$90 billion) and every ABN Amro share at 36.25 euros, the banks said in a statement.
The new company will have 220,000 employees and 47 million customers.
The two banks said that under their merger plan 12,800 jobs would be shed and 10,800 would be sub-contracted out.
Under the agreement ABN Amro is also separating off its US activities at LaSalle Bank, which it is selling to Bank of America for US$21 billion, a condition of the merger, the statement said.
The 12 billion euros of revenue generated by the sale of LaSalle will be handed over to shareholders of the new entity under a share buy-back program, the two banks said.
ABN Amro management has been under pressure from shareholder TCI, a hedge fund, to discuss takeover terms with other groups interested in buying the lender.
The Dutch bank had been set to meet yesterday with the Royal Bank of Scotland, Spain's Banco Santander and Belgian-Dutch group Fortis regarding a possible separate offer.
It is thought that the three banks, which would be able to cut more costs than Barclays, would divide up ABN assets between them.
However the Dutch central bank warned last week that a potential takeover bid by the three-bank consortium would be risky and complicated for shareholders.
On Friday, Barclays and ABN Amro had outlined specific plans for a merger, valuing the combined group at 140 billion euros with its main stock market listing in London, and its headquarters and a secondary listing in Amsterdam.
Arthur Martinez, of ABN Amro, will preside the group and John Varley, who currently heads Barclays, will be the executive director.
Outside Britain, Barclays has interests in continental Europe, Asia, the US, the Middle East and Africa.
ABN Amro has also expanded into emerging markets in Asia and has interests in Canada, Italy, Mexico and the US. It has 4,500 branches in 53 countries.
"The merger that is proposed strengthens in a significant way the development and distribution capacities of our products. Our combined geographical spread will ensure us at the same time exposure to developed economies and economies which are in strong growth," Varley said in a statement.
The deal is expected to be concluded in the fourth quarter.
ABN Amro plans to submit its strategic options to a shareholders' meeting on Thursday.
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