Barclays lifts ABN offer with China, Singapore help

By Steve Slater and Victoria Bi

LONDON/BEIJING (Reuters) - British bank Barclays raised its bid for Dutch group ABN AMRO to 67.5 billion euros ($93 billion) on Monday, helped by some of the biggest ever overseas investments by China and Singapore.

China Development Bank, whose main function is to make loans in support of Chinese government policies, and Singapore state investor Temasek agreed to invest up to 13.4 billion euros in Barclays to aid its fight for ABN.

Barclays said its new bid for ABN included 24.8 billion euros in cash and was up from its previous all-stock offer of 65 billion euros.

The offer is still below a rival 71 billion-euro bid from a group of European banks led by Royal Bank of Scotland (RBS), but Barclays said it expects the value of its offer to rise and indicated it has no plans to sweeten its offer further.

"We've put an enticing cream cake on the table for ABN shareholders, we are not going to top it up with cream," John Varley, Barclays chief executive, said at a press conference.

"We feel no need to do anything further."

A deal with either Barclays or the RBS team, which includes Spain's Santander and Belgian-Dutch group Fortis, would be the biggest ever bank takeover.

Analysts and investors said Barclays was playing a shrewd game, signaling it would not engage in a destructive bidding war and also boosting its shares to help win the day.

"Royal Bank of Scotland is still the favorite, but the odds are a little bit different to what they were on Friday," said Colin Morton at Rensburg Fund Management, a holder of both Barclays and RBS stock.

"The crux is whether shareholders want to participate in the deal or not ... you would think people would take the cash and run, unless Barclays can convince people how much benefit they can get out of it if they stick around," Morton added.

At 1415 GMT, Barclays shares were up 2.5 percent at 731 pence, boosted by the investment from China and Singapore and strong first-half results, and lifting the value of its new bid for ABN to almost 69 billion euros.

ABN shares were up 0.7 percent 36.91 euros, above the current value of the new Barclays bid at 36.35 euros but below the value of the RBS group's bid at 38.30 euros.

COMPETING BIDS

Barclays, Britain's third-biggest bank, said its new offer had not been recommended by ABN, but Varley said he hoped and expected that it would be.

The offer is conditional on being recommended by ABN's boards, but Varley declined to comment on whether he would withdraw if it doesn't get their backing.