So it wasn’t just a stiff upper lip. Barclays seemed weirdly unperturbed this month as the RBS-led consortium formally proceeded with an ABN bid that was unambiguously superior to its own offer. Now we know why. The London-based bank was negotiating a potential €13.4bn investment by two Asian governments. It was also sitting on results that should prompt upgrades to earnings estimates.

Spot the winner

Barclays is betting on a jump in its share price before the close of its new offer in late September. On Monday its bid, now two-thirds stock, was worth €36.40 per ABN share. Barclays’ shares would need to rise by 8 per cent to 798p to achieve parity with RBS’s largely cash offer of €38.40.

Is this remotely realistic? Even ABN is sitting on the fence, saying both offers have “merits”. Barclays probably hoped for a better initial reaction than the 3 per cent price rise on Monday. But with a poorly attended analyst meeting and high rather than dramatic trading volumes, this may not be a definitive gauge of investors’ views on a totally unpredicted event.

There are three reasons why the shares might rise as a direct result of the announcement. First, Barclays has found a way of increasing the cash component of the offer without resorting to the dreaded rights issue. Second, the interim numbers suggest that full-year earnings estimates will move up by 2-4 per cent. Finally, there is the strategic agreement with China Development Bank, which, it is argued, could be worth 50p per Barclays share. Given the soft nature of this – cross-referral of clients and collaboration on commodities – there are grounds for scepticism. But then again, with €10bn of Barclays stock, China’s biggest ever outward equity investment, CDB will be motivated.

Add in Temasek’s €3.6bn injection and the two governments would own 11 per cent of ABN/Barclays. That suggests real conviction in the global universal bank model and the valuation. So far the market has been much less enthusiastic, but it should pay attention to this expression of confidence. There are decent arguments that Barclays’ shares should move up, closing the gap with RBS further.

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