Tuesday, April 24, 2007

ABN Amro and Barclays Merges, More Jobs in India.

The United Kingdom's third largest bank Barclays will buy out Dutch rival ABN Amro holding for $91 billion (Euro 67 billion) in a cash and stock deal. The move will create one of the world's biggest banks, valued at £94bn and with its headquarters in the Netherlands.

Barclays offered $ 49.25 for each ABN share, slightly lower than Friday's closing price of $49.38), the banks said. As part of the deal, ABN announced it is selling its US unit LaSalle Bank to Bank of America Corp. for $21 billion in cash. News reports put the value of the deal at around $95.2 million.


The deal, the biggest ever M&A in the financial services space, would create the largest institutional asset manager and the world's eighth largest wealth manager but will result in over 12,000 job cuts at the two banks' operations across the world.

However, India will be a net gainer in terms of jobs as well as expanded operations of the two banks. While the number of new jobs have not been disclosed, sources close to the development pegged the figure at anywhere between 8,000 and 10,000.

"Part of the expected staff reduction will be through establishing shared services and off-shoring those positions to low cost locations, such as India, where new staff will be recruited at ABN Amro's existing ACES operations," ABN Amro and Barclays said in a joint statement.

The merger is expected to be completed during the fourth quarter of this year, the banks said.

Barclays' John Varley will be the Chief Executive Officer, and Bob Diamond will be President. The new board will initially consist of 10 members from Barclays and nine members from ABN.
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