Q&A: John Varley on Barclay’s proposed merger with ABN AMRO

Can you outline what you’re announcing?

Well we’re announcing a groundbreaking deal. This is the largest transaction
in the history of the financial services industry and it’s by far the biggest
cross border merger that has ever taken place. So the merger of Barclays and ABN
liberates a very substantial economic opportunity on behalf of our shareholders
and creates huge capability, huge firepower on behalf of our customers and our
clients. That’s why we feel the sense of excitement that we do.

But what is the point of this deal? What do you hope to achieve by
enlarging in this way?

Higher growth is really the driver of it. We’ve been driving very significant
growth in Barclays over the course of the last years. Our financial performance
makes that very clear. I believe we can accelerate, relative to that growth
rate, through the merger with ABN. So the key test is can we show our
shareholders performance that is better than standalone performance and my
answer to that is yes.

You’ve committed to very big synergies in this deal. Why are you
confident that you can get them?

Well, we’ve created the synergies through joint work. This has been an
intense period of study and analysis and we have created commitment around the
leadership table to the delivery of those synergies and we have the capability
around the leadership table to deliver those synergies.

But this deal is bigger than any deal that you’ve done before here.
What makes you think you can handle it?

Well I think what you need in circumstances of doing something that is quite
complex – the merging of two banks it’s a complex task undeniably. What are the
ingredients to success? First of all, clarity of business model, second, clarity
of management model and third, leadership expertise and experience. Now I’ve
gone for a very simple structure here. We have two big business groupings –
Investment Banking and Investment Management and Global Retail and Commercial
Banking. I’m very clear about who is in charge of those and they’re supported by
great executives, if I think about who I’ve got around the table.

This deal does smack of being a Euro fudge. We’ve
got headquarters in Amsterdam, we’ve got you in Amsterdam, but yet listing here
in the UK and we’ve got the FSA as lead regulator. It’s quite a mess.

European, yes, fudge, no, is what I would say. The structure is gin clear. We
have a unitary board. We have a unitary management committee. The things that
typically get in the way of cross border mergers have been addressed in the way
in which we structure the transaction and it is understandable that we would
have, in a large European enterprise as we will be, a head office in Amsterdam.
It is understandable that I as a chief executive should be spending a lot of my
time in the Netherlands? Of course it is. I don’t think we’ve fudged anything.

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