ABN/Barclays Merger May Face Credit Tightening
Rob Bates, JCK Senior Editor -- JCK Online, 4/23/2007 9:31:00 AM
British bank Barclays has agreed to buy Dutch bank ABN AMRO, a leading bank for the diamond and jewelry industry, for about 67 billion euro($91 billion) in what analysts are calling one of the largest bank mergers ever.
It is not known how this will impact the jewelry industry, as ABN AMRO has been a leading lender to the diamond and jewelry trades for some time. However, there is considerable speculation among the trade—and among other industry bankers—that it could force it to tighten up credit.
According to a report by Russell Shor in the GIA Insider, ABN holds an estimated one-forth of the diamond industry’s financing portfolio.
“It could really change things,” said one rival who did not want to be named.
As a Dutch bank, ABN has had historic ties to the diamond industry in Amsterdam and Antwerp. Executives there have longstanding relationships with the industry. And yet the industry’s unique and sometimes risky nature could prove unattractive for new owners—particularly in the wake of two recent bankruptcies of major companies in the industry.
The merger is not certain, as ABN has also received a counter offer from a consortium of three banks that want to break up ABN into components. It also may entertain other bids.
The proposed merger would give Barclays' shareholders 52 per cent of the combined group.
A call to an ABN AMRO banking executive was not returned.
