Barclays said today that in spite of writedowns due to subprime, etc., it predicts that 2007 will exceed last year's profit, though just barely. Everyone (traders especially) thinks this is good news, and if we were talking about Citi it definitely would be, but making a pound more that least year means that Barclays earnings will have moved an insignificant 4 percent, compared to the gigantic growth seen in the last four years. Barclays's estimate is "broadly in line with" analysts' average estimate of about $14.7 billion (7.1 billion pounds), news which move the stock as much as 6.2 percent in London trading. Interesting. What I'm getting at is that Barclays is trying to cover up a record 75 percent increase in profit for 2007, so that whenever that actual numbers come out, they can say they "beat" analysts' expectations, and continue to recover from a 7-week losing streak. That or they're just trying to cushion the blow for the inevitable admission that those rumors about a $10 billion writedown were true. I can't decide which.

Barclays says on track for 4 pct 2007 profit rise [Reuters]

Barclays May Match 2006 Profit This Year [Bloomberg]

Barclays was not lying last week when it categorically shot down scurrilous reports that it was about to take a $10 billion writedown, a denial the bank backed up this morning when it announced a writedown of only $2.7 billion on investments related to the subprime mortgage market. Of course, when they said there was “absolutely no substance to those rumors,” they meant to say “those rumors are only 27 percent correct,” but whatever: details. How do you like Barclays now? Probably not as much as Barclays likes itself. “Today’s extensive disclosure demonstrates the strength and resilience of our performance during the year and in particular during the turbulent month of October,” chief executive John Varley said in a statement.

Incidentally: You should watch this

Earlier: Barclays: $10 Billion Writedown Rumor Has As Much Merit As The One About James Cayne Smoking Dope

Barclays Writes Down $2.7 Billion on Mortgage Losses [Bloomberg]
A stitch in time [Breaking Views]
Barclays Ends Speculation Over Subprime Exposure [WSJ]

Following a nine percent decline on its stock price, Barclays said today that “there is absolutely no substance to those rumors [about us taking a gigantic writedown]” and denied plans to force chief executive John Varley and/or investment bank head Robert Diamond into early retirement and we totally believe them. Disclosure: we believed Citigroup when it said its losses were only around $3 billion, John Mack when he said Morgan Stanley wouldn’t take a $3.7 billion charge from its debt trading operation, Bear Stearns when it said there was still value left in those two hedge funds, and Jimmy Cayne, when he swore it was a ten pound bag of oregano in the bottom drawer of his desk. B-Clays wouldn’t say whether or not the bank will issue an emergency statement, so maybe it will, even if it didn’t lose a bunch of money, provided the Journal doesn't get cold feet about running its exposé on Varley’s inability to conquer his smack habit*.

Barclays Rejects Talk It Faces $10 Bln Writedown [Reuters via NYT]

*prove me wrong.

Barclays gave up its six-month battle to buy ABN Amro Holdings NV today after too few investors agreed to back the bid. The withdrawal clears the way and more or less rolls out a red carpet for Royal Bank of Scotland Group Plc, with Banco Santander and Fortis, to complete the biggest banking takeover ever. Barclays, which bid documents show had been working on creating the world’s sixth biggest bank for several years, is apparently unconcerned about being a potential target itself. Chief Executive Officer John Varley claimed to have full “confidence” in “an independent future” for the company.

And since no one posed an actual question regarding the difference in size between the two bids at the increasingly irrelevant—as far as the ABN Amro deal goes—British bank, Varley asked (and answered) one himself: "Do I think they've overpaid? My answer to that is yes. It is impossible to think that ABN has not been affected in terms of intrinsic value. The explicit purpose of us having a share-based offer was to ensure that we did not overpay...We were not prepared to purse victory at any price." And when you put it like that, it’s *almost* as though they *were* victorious, isn’t it? (Of course, analysts said Varley’s comment might have bit a “little revisionist,” considering that Barclays, you know, was never actually able to get the cash together in order to take on the consortium’s offer but whatever--details. Let him have this one thing.)

Barclays boss says RBS has overpaid for ABN [Telegraph]

Copyranter's seminal Pure Horseshit™ Award. [copyranter]

Barclays formally launched its 65 billion euro ($89 billion) bid for ABN Amro today. The British bank offered 2.13 ordinary shares and 13.15 euros per share for each ordinary share of the Amsterdam-based bank, the soaring eagles said in a statement today, and the acceptance period runs from tomorrow until October 4. The bid, as the ABN Amro aficionados in the audience well know, is part of Barclays’ attempt to beat a takeover by a Royal Bank of Scotland-captained team of RBS, Banco Santander SA, and Fortis (who just this morning won initial shareholder approval for the deal).

Let’s discuss that rival proposition for a second. The consortium is offering 71 billion euros (of which about 93% is in cash) to Barclays’ 65. I’ll say it again, for the Rain Men in the group—71 versus 65. On July 30, ABN withdrew its recommendation for the Barclays bid, rocket-scientifically noting that it’s inferior to the Royal Bank’s offer. But the very next day, its chief executive, Rijkman Groenink, said “We continue to support the Barclays offer because we believe overall it is to the benefit of shareholders and stakeholders,” and noted that the Dutch bank would probably formally recommend it to shareholders later. They like Barclays, they want Barclays, they just want more money from Barclays, or at least something on par with what the Royal Bank is offering. I get that, you get that, why doesn’t Barclays, who just came up with an offer of 65 billion euros (not >71 billion euros) get that? They’ve been told by ABN Amro, “We prefer you, just bring up those numbers and we’ll endorse it,” but for some reason are all “Nah. We’re good.” They’ve been told “71” and they’re saying “No. 65.”

Maybe it’s because it’s Monday, maybe it’s because some of us have a gaping hole in our foot from stepping on the prong of an errant belt buckle Sunday morning, but I’m flat-out asking you to either confirm that this is a matter of Barclays not getting the embarrassingly overt message or me not getting what the hell is going on ("they're playing hardball" is not an acceptable answer unless you elaborate, btw). You were already planning on trying to correct/humiliate me in the comments section for failing to understand the inner-workings of this deal (other than the SS implications), or for an improperly-placed apostrophe,* anyway, and now you have my blessing.

Earlier: ABN Amro Playing Horrible Game of Hard-To-Get With Barclays

Barclays launches $89 bln ABN takeover offer [Reuters]
Barclays Makes Formal Offer to Investors for ABN Amro [Bloomberg]
Fortis shareholders give initial OK to ABN deal [MarketWatch]

*FIND IT.

BarNLoungeclays announced today that the British bank posted a 14% increase in first-half net income, and said definitively that subprime mortgage defaults across the pond won’t hurt the investment bank this year. The chippies were able to protect their bottom line because as a group they are “very risk aware” and know that if you click your heels three times, subprime won’t affect profits (at least in 2007). 1st _ ½_P rose to 2.63 billion pounds ($5.35 billion, 40.1 pence/share), up from 2.3 billion pounds (35.1 pence/share) last year.

BarCap, conveniently located above Beer Bar, which Barclettes have not yet vouched for, will see a profit increase of at least 15% a year through 2008, and has limited risks in subprime mortgages, Barclays President Robert Diamond said. (Why, what have you heard?)

Barclays Says Subprime Risks Won't Reduce 2007 Profit [Bloomberg]

ABN Amro’s board decided over the weekend to withdraw its formal recommendation for a bid by Barclays, but it was only half-serious, and they were winking at the time (though that may have just been an involuntary spasm resulting from getting grapefruit in their eyes, which stings quite badly). ABN’s chief executive Rijkman Groenink said today that he supports the offer by the British bank and may formally recommend it to shareholders later, just not now, even though he sort of just did.

Groenick commented that "We continue to support the Barclays offer because we believe overall it is to the benefit of shareholders and stakeholders,” and the ABN-A board “still believes in the strategic rationale of the Barclays bid,” but they’re still “neutral.” So “neutral,” in fact, that they “acknowledged”—yes “acknowledged” numbers—that the 38.40 euros/ABN Amro share being offered by rival bidder Royal Bank of Scotland-Fortis Group of Belgium-Banco Santander Central Hispano is “higher” than Barclay’s proposed 35.73 euros/share. Because they're "neutral."

ABN's Chief Expresses Support for Barclays's Bid [WSJ]
Board to Remain Neutral in Bids for Dutch Bank [NYT]

If you see an army of people wearing bright blue T-shirts in Robert Venable or Breukelen Park today, just look straight ahead, and slowly walk away. An army of Barclays summer interns are fixing playgrounds, planting flowers, weeding and painting away in attempts to brighten the future of more than a few lonely associates pretending to be college interns at firm drink-ups. At least the kids are outside, and we hear several of them have irises that are ready to love again, or adjust to sunlight.

Barclays, the ever-so-modest advocate of community service, doesn't want you to know about the park effort, aside from the loud blue shirts that say "Banking on a Brighter Future" the bank is forcing everyone to wear. When reached for comment, a Barclays rep acted as if we were trying to confirm that the CFO has feline AIDS.

DB: Are there a bunch of Barclays employees running around fixing the city's parks and doing other good works?
Barclays Rep: Where did you hear that? Who told you? WHO TOLD YOU!!! You can't tell anyone, in fact, even having this conversation with you is putting us all in danger...no, no...no, I didn't mean to...NO...you have a choice Keith...there was so much love in this house...but you're going to have to run again...RUUUUUUUNNNNNNNNN :::silence:::

The interns should get their community service out of the way, because when they become full-fledged bankers the serviceable community gets a lot smaller. We'll never forget the recruiting event we went to in college (we won't give away the bank...cough...UBS...cough) when the banker leading the discussion was asked if the bank supports active community service (like you know, on those crazy things called nights and weekends) and the guy literally made a face as if he had mistaken a hornet's nest for a prophylactic and responded, "No. No way. You're not going to have time for that."

Intent on making its bid for ABN Amro a success, Barclays is claiming to be seriously considering dropping its eagle logo, over concerns by ABN Amro that the large bird of prey may remind clients of the Nazi regime. The insignia, dating back 300 years, has been redesigned several times, to what some people believe now resembles the German eagle holding a swastika used as a symbol by the Nazis, two people close to both banks (Senior Anti-Anti-Semitism/Swag Correspondents) told the Times. The British bank would apparently switch to ABN Amro’s green and yellow shield, when/if the attempted acquisition is successful. (If it’s not, Heil Hitler, and viva that eagle).

Barclays May Drop Symbol [New York Times]

The Royal Bank of Scotland got serious in its attempt to awkwardly cut in on the marriage dance of ABN Amro and Barclays Bank today, submitting a $96.4 billion hostile unsolicited takeover offer today and a $24.5 billion offer for LaSalle, its Chicago-based banking unit. And ABN remained adamant in its refusal to take RBS for a swing across the dance floor.

The RBS offers top the deals ABN already has in the works to sell LaSalle to the Bank of America for $21 billion and everything else to Barclays for $87.1 billion. ABN said it would submit both offers to shareholders without endorsing them—in other words, it rejected RBS’s advances. Although the offers were higher, it said that the conditions attached to both offers and uncertainty about financing rendered both “not superior” to the Barclays and Bank of America bids.

Maybe we should start a list of who is not suing ABN Amro. This morning Bank of America filed a lawsuit seeking a court order barring ABN from selling it's Chicago-based LaSalle unit to any other potential buyer or even from negotiating with anyone else, the Wall Street Journal reports.

The Journal explains how this fits in with yesterday’s ruling by a Dutch court halting the sale of La Salle to Bank of America:

The suit follows a ruling Thursday by a Dutch court, ordering ABN to halt the sale of LaSalle until shareholders can vote on it. ABN agreed to the sale to buttress its agreement to be taken over by Britain's Barclays PLC for $89.9 billion in stock, in what would be the world's largest banking deal.

The Dutch court's ruling could benefit a consortium led by Royal Bank of Scotland Group PLC, which is planning to make a competing bid for ABN as well as a rival bid for LaSalle, a key asset that RBC wants.

In addition to seeking an injunction against ABN, the suit claims monetary damages.

A legal expert we spoke with (who requested we not use his name since we won't pay his fees) said that ABN might welcome the Bank of America suit since it could relieve LaSalle of the duty to keep negotiating with other buyers.

Bank of America Sues ABN Amro [Wall Street Journal]

Here is the City bring us the official ABN Ambro song, to be sung to the tune of Gloria Gaynor's "I will survive."

We Won't Survive

'First we were afraid,
Now we're petrified

Our board knew it was all over
When that damn letter did arrive

They spent far too many days
Pondering what they were doing wrong

They took too long,
Now ABN will soon be gone

And so we'll merge
With Barclays Bank

We Won't Survive (AMN Ambo Song)

Reuter's reports today on Merrill Lynch's analyst note:

Shares in Barclays (BARC.L: Quote, Profile, Research) climbed for a second day on Friday as speculation mounted that Bank of America (BAC.N: Quote, Profile, Research) could buy it, with a leading analyst saying there would be strong merit to a deal.

"We believe Bank of America is very interested in acquiring Barclays," Merrill Lynch said in a research note. "Bank of America has previously indicated that the next stage of its expansion is to become a leading global commercial and investment bank," it added, saying buying Barclays would help it achieve that goal.

We're not sure which would bother the Brit bankers at Barclays more: being owned by the Spanish or the Yanks.

Barclays up as Bank of America deal talk mounts [Reuters]

We've heard this all before but rumors are once again flying that Barclays may be a takeover target by one of several Spanish banks.

Spain's BBVA (BBVA.MC: Quote, Profile , Research) and Banco Santander (SAN.MC: Quote, Profile , Research) and Bank of America (BAC.N: Quote, Profile , Research) were rumored as possible buyers, according to several dealers. All have been linked with Barclays before.

"Could it happen? Yes. Is it likely? Probably not. But the type of market we're in at the moment everybody is very jumpy about anything that might have a bid story to it," said Colin Morton, fund manager at Rensburg Fund Management.

The only problem we see with this is that it might take all the fun out of the traditional British banker's holiday in Spain. Who wants to vacation in you boss's backyard?

Bid talk propels Barclays shares higher: traders [Reuters]