Shareholders back Barclays merger plan

Barclays today gained shareholder support for its merger with Dutch bank ABN Amro but said it was prepared to walk away from the deal if the price was not right.

The group won backing from 90% of shareholders for its proposed merger, although shareholders representing 412.8 million shares – 10% – voted against the move and more than 81 million withheld their votes.

Barclays told investors that it would “not lose sight of economic reality” in its battle to secure ABN, with rival bidder Royal Bank of Scotland and its consortium partners increasingly threatening to derail the agreed merger.

Chief executive John Varley added: “Putting that bluntly, that means being prepared to walk away if we can’t conclude the transaction on the right terms.”

More than 100 Barclays shareholders attended the extraordinary general meeting, held at its London headquarters in Canary Wharf to seek votes on the merger.

Barclays stressed that it remained committed to the tie-up, which it hopes will accelerate plans to become “one of a handful of universal banks leading the global industry”.

The bank confirmed that its cash-and-shares offer for ABN now stood around €5.5 per share lower than the RBS-led counter offer after recent stock market turmoil hit banking stocks.

Barclays upped the cash element of its offer only two months ago to close the gap with the rival bid and a funding deal helped boost shares, seeing its proposal increase to €67.5bn.

But its recent share price tumble has wiped around €6.7bn off the value of its offer, leaving it far short of the RBS consortium’s €71.1bn largely cash-based offer.

However, Mr Varley said the shares element of its deal also helped prevent the group paying over the odds for ABN.

He said: “Our shareholders have a significant degree of protection against our overpaying by virtue of the market based nature of the majority of the consideration that we pay.”

ABN shareholders have until October 4 to accept the merger offer and until October 5 to vote on the RBS team’s takeover.

Investors in the Dutch bank are meeting in Rotterdam next Thursday to discuss both approaches.

Meanwhile, Barclays also took today’s EGM as an opportunity to update shareholders on performance, given the turbulence in financial markets.

Barclays had to borrow from the Bank of England’s standing facility twice last month, which had caused fears over its liquidity.

But Mr Varley stressed that “group liquidity remains strong and our capital ratios are in line with our targets”, adding that expected growth within its investment banking arm remained unaffected by wider market woes.