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Friday, May 18, 2007

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ABN Amro & Barclays complement

It’s official now! In a deal worth a whopping $91.2 billion, which would go down as one of the largest in the financial services domain till date, Barclays has merged with Dutch banking giant ABN Amro. The newly formed entity will now be named as Barclays Plc. and will be one of the largest banking entities on earth, boasting an employee strength of 22,000 and a staggering customer base of 47 million.

ABN Amro is also disposing off its consumer banking arm at the La- Salle Bank by selling it to Bank of America for $21 billion as a part of the deal. This revenue generated will be passed on to the shareholders of the new company through share buy-backs. Commenting on the merger during the announcement of agreement, John Varley, CEO, Barclays said, “This proposed merger represents a unique opportunity to create a new competitive force in financial services, which will deliver benefits for our customers and clients and generate sustained growth and additional value for our owners... ” There are also expected to be around 23,600 jobs, out of which over 10,000 will be lost from the low cost destinations like India.

States Kerry Grant, Analyst, Louis Capital Management, “Barclays will have a pretty tough time replicating its success in the US.” The major challenge will be to enhance the weak presence of the combined entity in Asia, where there are just 67 branches, that too, of ABN Amro. The complementarity of their operations is going to be their major strength.

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Source :
IIPM Editorial, 2007

IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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