ABN Amro urges voters to reject break-up demands

ABN Amro on Wednesday met all the demands of activist investors by including a break-up vote on the agenda of its April annual meeting.

However, the Dutch bank which is being courted by Barclays of the UK, urged shareholders to reject the far-reaching demands as discussions about its future continue.

The decision to include the controversial motion reflects the fact that ABN does not want to risk provoking investors during the Barclays talks, which are aimed at creating the world’s fifth largest bank with a market value of more than $175bn.

It also underscores a view within ABN that many shareholders believe the takeover negotiations have superseded the demands levelled a month ago by minority investor The Children’s Investment Fund (TCI).

ABN has undertaken a comprehensive sweep of shareholders since TCI issued its call, and will approach next month’s annual meeting in The Hague confident of support from its investor base.

The bank is understood to believe that few shareholders would risk a move that could jeopardise the bank’s sale. Analysts expect Barclays to table a bid of about €35 a share, mostly in shares. ABN declined to comment.

TCI has called for five resolutions to be added to the agenda, the most radical being calls for a break-up, sale or merger of the bank.

In order for ABN not to include the resolutions, it would need to have demonstrated a conflict with the interests of the bank.

Lawyers could have argued that the Barclays discussions provided the perfect opportunity to cite that clause. However, ABN is understood to have chosen not to go down that road, and by so doing will hope to demonstrate that it takes shareholder views seriously.

It will be aware, too, that TCI has a formidable reputation for shareholder activism. The London-based hedge fund has made clear to ABN that it wants the bank to consider all options for a sale, and not simply to talk to Barclays, with which it has entered a period of exclusivity.

Analysts believe a number of rival bidders may be waiting in the wings, including Citigroup, HSBC, Royal Bank of Scotland and Santander, any of which could generate greater synergies than Barclays.

Bob Diamond, president of Barclays, Wednesday stressed that the Barclays takeover approach was in line with the bank's previously stated strategy.

Speaking at the Morgan Stanley European banks conference in London, Mr Diamond said Barclays was “in a strong position” in its talks with ABN.

In his speech he set out the main trends driving future opportunities in investment banking and asset management.

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