With
news of a possible merger between British bank Barclays and
Netherlands’ largest bank, ABN Amro Holding, a frantic and deeply expensive
bidding war has started amongst some of the most prominent banks in
Europe. In a statement made by ABN officials, there has been “exclusive preliminary discussion with Barclays concerning a potential combination of the two organizations.”
This merger, which would make the combined bank worth more than $166 billion dollars, has resulted in analysts predicting that Citigroup, HSBC, and the Royal Bank of
Scotland and
Santander will be prepared to make
counteroffers to ABN within the weeks to come.
The two banking companies, although operating in the same industry, have relatively limited overlap in terms of geographical location. ABN would give Barclays a retail credit card presence as well as their business of financing acquisitions; and more importantly, the company would spread its influence beyond that of Europe - expanding into the lesser invested Asian and African markets.
With the recent successes of similar bank mergers between Bank of America/Fleet/MBNA, rumors of a possible merge have resulted in significant increases in stock values for ABN. The merger would produce extensive cost savings in terms of competitive advertising and marketing, while at the same time promoting widespread familiarity with the company name throughout Europe and Asia and increased corporate profits. Analysts have stated that the acquisition of ABN would essentially be a plus for any large European bank, so it all boils down to who’s willing to dump out the big bucks. If only ABN had a Buy-It-Now option, all of this unnecessarily scrupulous “economic analysis” could be avoided!
-Seon Hwang, Kristy Choi, Minsoo Park, Chris Liu
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