RBS, Fortis, Santander eye break-up bid for ABN

By Mathieu Robbins and Clara Ferreira-Marques

LONDON (Reuters) - Royal Bank of Scotland (RBS.L), in a consortium with Fortis (FOR.BR) and Spain's Santander (SAN.MC), has approached ABN AMRO AAH.AS with a view to entering takeover talks, a source close to the matter said.

ABN, worth 64 billion euros ($87 billion) at current market prices, has been in exclusive merger talks with Barclays (BARC.L) since last month to strike the biggest-ever bank takeover, but a 30-day period of exclusivity expires next week.

The source said RBS, Europe's second-biggest bank, approached ABN on Friday morning.

A planned joint bid from the three banks would entail a full break-up of ABN's extensive retail and wholesale banking operations, a move that the Dutch regulator indicated this week it would not oppose, though the carve-up would be very complex, as would structuring a three-way offer.

Barclays currently has the blessing of ABN's board, but analysts say the trio of banks could reap higher cost-savings and therefore offer a higher price -- up to around 40 euros per share on some estimates, compared with Barclays' expected bid at 34 euros and a market price of 33.65 euros at Friday's close.

Fortis and RBS were not available for comment, while both Santander and ABN declined to comment.

Earlier on Friday, Santander Chief Executive Alfredo Saenz said Spain's largest bank was still looking at opportunities and markets that would fit into the group. Depending on the deal, ABN could fill gaps in Brazil, Italy and elsewhere in Europe.

Media reports last weekend suggested that in a joint deal Santander would get ABN's European retail operations and South American businesses, while RBS would acquire ABN's U.S. retail bank LaSalle and its wholesale banking operations.

Fortis has pledged to expand internationally so that at least 30 percent of net operating profit comes from outside the Benelux countries by 2009.

AND BARCLAYS?

Barclays is still the only suitor with the blessing of ABN's board and remains in exclusive talks until next week, though it was under pressure from shareholders on Friday to secure a sound price or swallow its pride and walk away.

The exclusivity period is due to end around April 18 -- just over a week before shareholder meetings for both banks on April 26 and days before an April 20 deadline for ABN's institutional shareholders to register proxy votes.

The banks do not have to make a statement on April 18, but a source familiar with the matter said the two sides planned to give an update by then, telling the market whether they had agreed a bid, extended exclusive talks or ended discussions.

Barclays declined to comment on whether Friday's move by RBS could accelerate talks and an eventual statement.

Barclays and ABN have already agreed a combined company would be headquartered in Amsterdam and that the two top jobs would be split, but sources familiar with the matter said on Friday they were hammering out key issues including corporate structure, cost synergies and price.