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Barclays profits climb amid ABN Amro takeover battle
2007-08-02
British bank Barclays, locked in a bidding war for Dutch peer ABN Amro, on Thursday posted a healthy profits increase and falling bad debts during the first half of 2007. Barclays is battling a European consortium led by the Royal Bank of Scotland for control of ABN Amro. However, recent stock market falls have eroded the value of Barclays' bid which is mostly in shares -- in contrast with the RBS bid which is mainly in cash. Net profit rose 13.2 percent to 2.943 billion pounds (4.37 billion euros, 5.98 billion dollars) in the six months to June 30, compared with 2.601 billion pounds in the same period of 2006, Barclays said Thursday. Bad debts, or loans that have been written off, sank 8.9 percent to 959 million pounds, while revenue advanced nearly 8.5 percent to 12.15 billion pounds at the third-biggest bank in Britain. Pre-tax profit climbed 11.6 percent to 4.101 billion pounds in the first half thanks largely to a solid performance from investment wing Barclays Capital. Group chief executive John Varley said he was "confident" the bank's bid for ABN Amro would succeed, even though the value of its mostly-shares offer has been reduced by recent falls in the Barclays share price. "The issue isn't where the share price is today, it's where it is when ABN Amro shareholders come to vote, and that's more than two months away," Varley told reporters on a conference call after publication of the results. "Am I confident? Yes I am," he added. Varley said Barclays' stock could recover sufficiently to outweigh a rival mostly-cash offer from the RBS-led consortium by the time ABN investors vote on which bid to accept in September. Earlier this month, Barclays called in financial firepower from state-linked China Development Bank and Singapore investment firm Temasek Holdings to boost its ABN bid. The British bank sweetened its offer by including a cash element as part of a revised informal bid worth some 67.5 billion euros (93.3 billion dollars). The RBS consortium, which also comprises the Dutch-Belgian group Fortis and Banco Santander of Spain, has formally offered 71.1 billion euros, which is 93 percent in cash. Either takeover would become the world's largest acquisition in the banking sector. ABN Amro withdrew its backing for a previous bid from Barclays late last month, saying it would recommend neither of two mammoth offers.
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