ABN Amro and Barclays are rumored to have agreed on several details regarding a potential merger. Points include the combined company's status as a British plc and the positioning of its HQ in Amsterdam. The company would also have a Dutch chairman. If the merger goes through, the new entity would be Europe's second-largest bank, with a market cap of about $156 billion. Analysts, meanwhile, are expressing skepticism about earlier speculation that Bank of America would either become a rival bidder or purchase ABN's Chicago-based LaSalle Bank holding. Bank of America had $590 billion in deposits as of June 30, 2006, or approximately 9% of all U.S. deposits. Federal regulations cap nationwide deposits at 10%. An acquisition of LaSalle, which has $60.4 billion in deposits, could put BoA in violation. An acquisition of Barclays, however, could make some sense, according to UBS analyst Matthew O'Connor: "...we believe Bank of America would have a lot of interest [in Barclays] given its strong capital markets [business and] BofA's sluggish U.S. growth prospects." Counters Richard Bove, analyst with Punk Ziegel: "Bank of America has repeatedly indicated that it does not want to be a retail bank outside the United States. This would seem to rule out the purchase of ABN Amro or even Barclays."
Sources: Reuters, MarketWatch
Commentary: Barclays Approaches ABN Amro Regarding Possible Takeover • ABN AMRO: Children's Investment Fund Urges Break-Up or Sale • The Long Case for Barclays
Stocks/ETFs to watch: ABN AMRO Holding N.V. [ADR] (ABN), Barclays PLC [ADR] (BCS). Competitors: Deutsche Bank AG (DB), JP Morgan Chase & Co. (JPM), Lloyds TSB Group plc (LYG). ETFs: PowerShares International Dividend Achievers (PID), iShares MSCI Netherlands Index (EWN)
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