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Chinese cash fuels Barclays bid Chinese cash fuels Barclays bid
(about 1 hour later)
Barclays has raised its offer for the Dutch bank ABN Amro, after striking a deal with the Chinese and Singaporean governments to help fund the move. The Chinese and Singapore governments have become key investors in Barclays, helping the UK firm to raise its offer for the Dutch bank ABN Amro.
It has said it will now pay 67.5bn euros (£45.4bn; £93.4bn) in cash and shares for ABN. The China Development Bank (CDB) and Temasek, the investment arm of the Singaporean government, have invested £2.4bn (3.6bn euros) in Barclays.
The China Development Bank and Temasek, the investment arm of the Singaporean government, are to invest 3.6bn euros in Barclays. And they will invest a further £6.5bn if the ABN takeover goes through.
And they will invest a further 9.8bn euros if the ABN takeover goes through. Barclays has said it will now pay 67.5bn euros (£45.4bn) in cash and shares for the Dutch bank.
A group led by Royal Bank of Scotland (RBS) is also vying for the Dutch firm. Its current offer is higher than Barclays' revised bid.
AmbitiousAmbitious
The BBC's Business Editor Robert Peston revealed on Sunday that the Asian deal was being negotiated. A group led by Royal Bank of Scotland (RBS) is also vying for ABN and its current offer is higher than Barclays' revised bid.
Barclays shares climbed 2% higher on Monday after details of the Asian tie-ups emerged.
The deal shows the enthusiasm bordering on desperation of western institutions to tap into the huge Chinese market Robert PestonBBC Business Editor Read Robert Peston's blog
The BBC's Business Editor Robert Peston revealed on Sunday that the Asian deals were being negotiated.
He said that Barclays would be hoping that its new relationship with the CDB would yield it hundreds of millions of pounds in extra profits from doing new business in the Chinese economy.
If Barclays acquires ABN, the Chinese state would emerge with a shareholding of 7.7% in the enlarged group.If Barclays acquires ABN, the Chinese state would emerge with a shareholding of 7.7% in the enlarged group.
It has pledged not to raise its stake to more then 9.9 per cent of the group over the next three years It has pledged not to raise its stake to more then 9.9% of the group over the next three years.
A smaller stake of about 3% would be taken by Temasek. A smaller stake of about 3% would be taken by Temasek - which is owned by the Singapore government but makes independent investment decisions.
The deal was arranged by the leading US private equity house, Blackstone - which recently sold a £1.5bn stake in itself to the Chinese state. Barclays has also announced that it will buy in several billion pounds of its own shares in a clawback deal.
Potential controversy
The Asian deals were arranged by the leading US private equity house, Blackstone - which recently sold a £1.5bn stake in itself to the Chinese state.
The Chinese state has $1.2 trillion of foreign exchange reserves to invest, much of which has been placed in US Treasuries or government bonds.The Chinese state has $1.2 trillion of foreign exchange reserves to invest, much of which has been placed in US Treasuries or government bonds.
China recently signalled it would be taking a more imaginative and aggressive approach to how it invests hundreds of millions of dollars, including buying significant holdings in overseas companies.China recently signalled it would be taking a more imaginative and aggressive approach to how it invests hundreds of millions of dollars, including buying significant holdings in overseas companies.
The deal with Barclays under negotiation would be the most ambitious manifestation to date of its new boldness as an investor. Beijing ending up with an influential stake in such an important European financial institution as the merged Barclays/ABN may prove controversial, Mr Peston added.
The idea that the Chinese government could end up with an influential stake in such an important European financial institution as the merged Barclays/ABN could prove controversial. "When the initial excitement has died down, there will be some politicians and business people who will wonder whether when China buys abroad on this scale, the balance of economic power may be shifting eastward in a way that should concern us," he said.
Some Barclays shareholders may be concerned that the Chinese are buying the shares without them being offered to existing shareholders.
Barclays has also announced that it will buy in several billion pounds of its own shares.