RBS group threatens hostile offer, ABN opens books

LONDON (Reuters) - Three banks led by Royal Bank of Scotland (RBS.L) threatened to launch a hostile bid for ABN AMRO AAH.AS in a sign of their growing resolve to elbow aside rival Barclays to secure the world's biggest banking takeover.

In response, ABN lifted a contentious "standstill" condition attached to opening its books to the group, saying it was "committed to exploring the consortium's proposal in a constructive manner."

The RBS consortium, which earlier this week proposed a 72 billion euro ($98 billion) bid for the ABN, had opposed the clause. Their proposed offer could trump an agreed all-share deal from Britain's Barclays (BARC.L) worth around 65 billion euros at current prices.

The consortium, which also includes Santander (SAN.MC) and Fortis (FOR.BR), formally notified ABN earlier on Friday of their intention to make a public offer.

"Under Dutch regulation, this is effectively the announcement of a hostile bid," analyst Jean-Pierre Lambert at Keefe, Bruyette & Woods said. "This indicates the consortium is quite serious."

By lifting the provision and offering the consortium due diligence access to its books, ABN may enter buyout talks with the consortium, a step that ABN shareholders demanded in an annual meeting held on Thursday. The shareholders also backed a motion to break up or sell the bank.

RBS, Fortis and Santander were not immediately available to comment.

The RBS-led group has not ruled out sweetening its offer and has leeway to do so, sources familiar with the matter said.

The banks, who say they want to meet with ABN's board as soon as possible, have also said their proposed offer is conditional on ABN scrapping the planned $21 billion sale of U.S. unit LaSalle -- a key asset for suitor RBS (RBS.L) -- to Bank of America (BAC.N).

The LaSalle sale, which includes a "go-shop" clause allowing ABN until midnight on May 6 to seek higher bids, also prompted the consortium's statement on Friday.

Under Dutch law, a bidder can either agree an offer with management or must give seven days' notice of its intentions. A suitor cannot announce a price without giving the target a chance to discuss the offer during that week.

A seven-day period from the notification late on Thursday would end late next week -- days before the LaSalle sale closes.

GOING HOSTILE?

"The consortium want an agreed bid, but they also want to ensure the right to make an offer anyway," one source familiar with the matter said.

"Does it signal an intention to go hostile? Yes, I think it does," said Antony Broadbent, analyst at Sanford Bernstein in London. "And it also signals that RBS does not view the LaSalle obstacle as insurmountable."

The consortium is likely to have been encouraged by two-thirds of ABN's shareholders on Thursday voting in favor of a proposal to sell or merge parts or all of the bank. A Dutch commercial court will also hear a lawsuit on Saturday by shareholders' group VEB to freeze the LaSalle sale.

"It feels like the pendulum has definitely swung towards RBS and the consortium and away from Barclays, but the consortium is still rife with complexities and difficulties," Broadbent added.

But the outcome is far from clear cut. Investor Delta Lloyd, which owns about 1 percent of ABN's voting shares, said it was "mildly supportive" of the Barclays offer but it was unclear how the battle will develop.

"We still only have one bid. To really judge what is best for investors all the cards must be on the table," a spokesman for Delta Lloyd said.

Barclays and its rivals are attracted to ABN's exposure to fast growing markets such as Brazil, Asia, Italy and investment banking. The Dutch bank has come under pressure from its investors after years of underperformance.

ABN's management favors a deal with Barclays, saying it wants to build up the business rather than break up the bank.

Shares in ABN and Barclays rose as the consortium's chances of success improved. ABN shares closed up 1.2 percent at 36.8 euros -- just above the Barclays offer, worth 35 euros at current prices, but below the consortium's 39 euro proposal, indicating market expectations of a drawn out fight for ABN.

Barclays shares ended up 1 percent. RBS and Fortis both fell about 1.5 percent and Santander lost 2.4 percent.

(Additional reporting by Mathieu Robbins and Mark Potter in London, with Reed Stevenson and Gilbert Kreijger in Amsterdam)