China and Singapore buy Barclays shares

The Chinese and Singaporean governments became major shareholders in Barclays bank today as the bank raised its offer for Dutch takeover target ABN Amro.

The Chinese and Singaporean governments became major shareholders in Barclays bank today as the bank raised its offer for Dutch takeover target ABN Amro.

The bank, which is fighting against a Royal Bank of Scotland-led consortium to land ABN, is using the funding to lift its offer to €67.5bn.

The deal sees the China Development Bank take a 3.1% stake in Barclays, with Singaporean investment fund Temasek taking 2.1%, in a €3.6bn investment.

If Barclays' bid for ABN succeeds, the duo will buy further shares worth up to €9.8bn in the combined business.

Barclays has previously agreed a £45bn (€66.9bn) offer with the ABN board, although its Royal Bank of Scotland-led rival tabled a formal £48.2bn (€71.7bn) bid last Friday.

The China Development Bank (CDB) was founded in March 1994, and falls under the direct jurisdiction of the Chinese government's state council.

The bank, which has assets of around £150bn (€223.2bn), has funded infrastructure developments and national projects but earlier this year signalled that it would take on a broader investment approach.

Singapore-owned Temasek has an investment portfolio worth US$80bn (€57.9bn) in sectors including transport, real estate and energy.

If the merger goes ahead, CBD will own a stake of between 6% and 8% in the new group and Temasek will have a holding of around 3%.

The new Barclays proposal for ABN includes a cash element of £16.7bn (€24.8bn) - around 37% of the new offer - although the rival RBS-led bid is comprised of 93% cash.

Barclays said its new offer gave certainty and flexibility to ABN's shareholders.

Chief executive John Varley said the Barclays proposals offered a "compelling story" to the Dutch bank's shareholders, while allowing opportunities for further growth in Asia through the tie-ups with CDB and Temasek.

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