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The Royal Bank of Scotland (RBS)–led consortium bidding for Dutch bank ABN Amro may have scope to increase its offer by drawing on additional funds from Santander, the Spanish banking group.
Santander, which is set to take over ABN’s Brazilian and Italian assets, was described as not having paid full auction value. It was pointed out that RBS and Fortis, the third consortium member, would have little scope to throw more money into the pot. Santander, however, is seen to be getting its assets relatively cheaply in comparison to full auction value, it was suggested.
Spokespeople for Santander declined to comment.
The consortium’s offer of EUR 38 per share for ABN is currently the highest on the table. It has been suggested, however, that Barclays may still stretch its capital ratios or make disposals to finance a further cash increase, though this was not confirmed by the Barclays’ camp.
Any potential increase in Barclays’ offer is likely after Fortis’ EGM on 6 August, where the Belgian bank will seek 75% approval to raise EUR 13bn for its part of the deal via a rights issue.
It was suggested that Barclays may be awaiting the outcome of this EGM before putting its best offer on the table as there was a slim chance that Fortis could fail in its fund raising efforts.
Should Barclays match or top the consortium’s offer, the consortium could then seek further funds from Santander to increase its bid, it was argued.
While it was acknowledged by the consortium’s camp that there was scope to improve the offer should Barclays increase its bid, it was suggested that this would not necessarily be as straight forward as just one consortium member stumping up more cash. Santander would not pay more for the same, it was stated.
It was also suggested from within the consortium’s camp that a further increase from Barclays was not envisaged due to pressure from its own shareholders.
Santander’s shareholders are today, Friday, voting on a EUR 4bn capital increase and EUR 5bn convertible bond issue to finance the deal. Santander has valued its total investment in ABN at EUR 19.855bn, with the remaining cash coming from asset disposals, accelerated securitization plans and an increase of the capital leverage of the enlarged Santander group.
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