Barclays profits on ABN despite big costs - Yahoo! Finance

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Thursday March 27, 04:05 PM
Reuters

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Barclays profits on ABN despite big costs

LONDON (Reuters) - Barclays (LSE: BARC.L - news) <BARC.L> spent about 100 million pounds on its failed attempt to buy ABN AMRO (Amsterdam: ABAGB.AS - news) last year, including 5 million paid to one adviser, but the costs were easily covered by the break fee it received.

The battle for Dutch bank ABN, the biggest bank takeover ever, raged from March until a consortium led by Royal Bank of Scotland (LSE: 90ID.L - news) <RBS.L> sealed the 70 billion euro deal in October, but details of costs for the dozens of bankers, advisers, lawyers, printers and others involved have been scarce.

Barclays had agreed to a merger with ABN and was paid a 200 million euro (157 million pound) break fee when its partner pulled out.

Barclays' annual report, released on Wednesday, said its 2007 expenses were cut by 58 million pounds due to the break fee net of transaction costs, indicating costs came in at just under 100 million.

The report showed Naguib Kheraj, the bank's former finance director, was paid 600,000 pounds per month for advisory work related to the ABN deal over eight months.

For the May-December period, Kheraj received 4.9 million pounds, including benefits, for a "corporate finance advisory role". As finance director from January to March he earned 657,000 pounds in salary and bonus, and was paid 218,000 pounds for helping hand over to his successor in April.

Barclays said a streamlined board met 13 times outside of scheduled meetings to discuss the ABN deal. Including those meetings, the board spent 49 percent of its time last year discussing mergers and acquisitions, the report showed.

RBS (LSE: RBS.L - news) , which led a consortium that also included Spain's Santander <SAN.MC> and Belgian-Dutch group Fortis (Amsterdam: FOO.AS - news) <FOR.BR>, has not disclosed how much it paid in fees on the deal.

The consortium estimated last July that advisory fees and transaction costs would be about 660 million euros, including 175 million euros in advisory fees and 485 million euros on expected costs related to financing the offer, such as underwriting rights issues.

(Reporting by Steve Slater; editing by Sue Thomas)

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