Royal threat looms over Dream Team

1. The mega-merger would spur consolidation of banking and financial industry across Europe and elsewhere.
2. Big players forming into a cartel and nudging away smaller players would make small customers hostage to arrogant banking practices.

Barclays, Britain’s third-largest bank, will takeover its Dutch rival ABN Amro in a cash and stock deal, valued at over USD 90 billion, in what is being termed as the world’s biggest financial services takeover.

The deal would make the merged entity the largest asset manager and the world’s eighth largest wealth manager, but will result in over 12,000 job cuts at the two banks operations across the world.

However, there remains a strong threat of a counter-offer from a rival group led by Royal Bank of Scotland.

The deal would create the world’s fifth-biggest bank with a market value of about $190 billion and 47 million global customers and catapult Barclays to the top tier of the global banks and reduce its reliance on the mature UK market. The new merged entity, with headquarters in Amsterdam, would become Europe’s second largest bank in market value, just behind HSBC.

“ It’s a dream fit”, Barclays Chief Executive John Varley told reporters at an Amsterdam news conference.” The appeal of this transaction is the substantial growth opportunity it presents.”

The Barclays offer, would herald a new round of mergers in the European banking industry. Italy’s UniCredit SpA has already reportedly signalled its interest in France’s Societe Generale SA with a view to building the world’s seventh largest bank.

The Barclays bid to launch an expensive, cross-border bid is seen by British financial experts as an indication of UK corporate sector’s late realisation that it has to play hardball in the global market rather than simply allowing other aspirational companies from other parts of the world to come in and buy up corporate equivalent of “bits of the British family silver”.