ABN Amro preparing sale of Brazil's Banco Real

May 21, 2007, 7:43 GMT

Amsterdam - ABN Amro is preparing to sell Brazilian offshoot Banco Real in a sale that would enable ABN Amro and Barclays to compete with the offer made by banking consortium Fortis, Royal Bank of Scotland and Santander, Dutch financial daily newspaper Financieele Dagblad reported on Monday.

If the sale takes place, only half of the ABN Amro holding that existed early 2007 will remain intact. Earlier this year, ABN Amro also sold its US subdivision LaSalle.

The Dutch financial daily cited an anonymous source who confirmed the two merger partners were conducting preparatory talks about the sale.

However, the sale would only go through if the consortium decided to place another bid on ABN Amro.

If it failed to do so, 'ABN Amro and Barclays will not do anything either,' the anonymous source was quoted. The banking consortium has until May 27 to place another bid on the Dutch holding.

Analysts call the sale of Banco Real a 'logical step' in the battle for the takeover of ABN Amro.

Jean-Pierre Lambert of Keefe, Buyette & Woods said 'this development is hard to resist for Barclays.'

Barclays would prefer to keep the Brazilian bank. However, Lambert said, the British bank has to avoid becoming a target for possible takeovers itself. In this context, winning the battle for ABN Amro is more important for Barclays than retaining the Brazilian market.

If ABN Amro sells Banco Real to the highest bidder, it can give shareholders extra cash after the merger with Barclays.

Earlier this month, Brazilian bank Banco Itau and Spanish banks BBVA and Santander expressed their interest in Banco Real.