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Mon 23 Jul 2007 10:40 AM

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Barclays raises ABN bid to $93bn

Offer helped by $4.98bn investment in Barclays by China Development Bank and Singapore's Temasek.

British bank Barclays has raised its offer for ABN AMRO to 67.5 billion euros ($93 billion) and included some cash, helped by major investment from state authorities in China and Singapore.

Barclays said on Monday its new bid was 42.7 billion euros in shares and 24.8 billion euros in cash, up from its previous all-stock offer of 65 billion euros.

The new offer has been helped by an investment in Barclays of up to 13.4 billion euros by China Development Bank and Singapore state investor Temasek Holdings.

However, the new bid is still below a rival 71 billion euro bid from a group of European banks led by Royal Bank of Scotland, which is over 90% in cash.

"I think it's too low," said ING analyst Alain Tchibozo of the new Barclays offer. "It needs to be nearer 80 billion (euros). They need to make a difference."

Either offer for ABN would be biggest ever bank takeover.

ABN recommended Barclays' previous offer, but has come under pressure from some shareholders to be more receptive to the higher bid from the Royal Bank of Scotland (RBS) team, which also includes Spain's Santander and Belgian-Dutch group Fortis.

Barclays Chief Executive John Varley told reporters that ABN would look at share price reactions before deciding whether to back its new offer, but that he "hopes and expects" it will.

At 0705 GMT, Barclays shares up 2.7% at 732.5 pence. ABN AMRO was up 0.7% at 36.9 euros, RBS was up 0.7% at 614.5 pence, Santander up 0.4% at 14.03 euros and Fortis up 0.2% at 30.05 euros.

ABN said it would examine both offers in "a fair and transparent manner," but welcomed the strategic investment in Barclays from China and Singapore.

"The proposed strategic cooperation with China Development Bank further enhances the growth opportunities of the combined group in the attractive Asian market and can result in creation of additional long-term value for ABN AMRO shareholders," the Dutch bank said in a statement.

China Development Bank and Temasek will invest up to 13.4 billion euros in Barclays, with 9.8 billion euros of that conditional upon completion of the deal with ABN.

Under the deal, China Development Bank will take a 3.1% stake in Barclays, potentially rising to around 8% of an enlarged Barclays. Temasek will take a 2.1% stake in Barclays, potentially rising to just over 3%.

Barclays also said its earnings in the six months to the end of June rose 14% from a year ago to 4.1 billion pounds.

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