EGM Statement
Barclays PLC
14 September 2007
14 SEPTEMBER 2007
BARCLAYS PLC EXTRAORDINARY GENERAL MEETING
CHIEF EXECUTIVE'S STATEMENT BY JOHN VARLEY
Our strategy is to increase the rate of growth in Barclays by diversifying our
earnings base. That means maximising the alignment between Barclays and growth
in the industry. The sources of growth in the industry are, as we see it,
clearly observable and the growth opportunity is large.
In the knowledge that the industry would grow strongly around the world, we set
out some years ago on a journey of transformation in Barclays. To be precise:
that journey was to transform the UK clearing bank of the 1990s into the
universal bank of today. By developing world class capabilities in Barclays we
have been able to redefine the growth opportunity for our shareholders. And
we've also been able to redefine the geographical footprint on which we can
legitimately expect to compete successfully.
This strategy has delivered strongly. Group profits have doubled as the
percentage contribution from outside the United Kingdom has more than doubled.
We're clear that the best vehicle in which to drive fast towards growth in the
industry over the course of the coming years is a universal banking business.
That's why we describe our goal as being to position Barclays as one of a
handful of universal banks leading the global industry.
And that's why we decided to pursue the ABN AMRO opportunity when it presented
itself. The pursuit of merger with ABN AMRO represents no change of strategy.
But it does represent an unusual and large opportunity to increase the speed of
strategy implementation.
That's why it has been right for us to pursue this opportunity and that is why
it's right for us, on the right terms, to seek to conclude the merger
successfully. Together with the people of ABN AMRO we would be creating a
competitive force that would, by dint of brand, physical footprint and
capability, be very well equipped to take market share in a growing market.
The standalone Barclays offers significant growth to our shareholders through
time. A successful merger with ABN AMRO would create incremental growth beyond
that.
Although we are committed to capturing, through the merger with ABN AMRO, the
cost synergies which we've announced the opportunity is not a cost based
opportunity. The real opportunity is a revenue based opportunity, driven by
combining two strong franchises, with great customer and client relationships
around the world.
Throughout the period since we announced our intention to merge with ABN AMRO,
we've been clear in saying to ABN AMRO shareholders that the merger with
Barclays offers growth, certainty and deliverability.
Most of the offer consideration will be delivered in Barclays stock. As the
valuation of banks around the world has fallen in response to market turbulence,
so too has the see-through value of our offer to ABN AMRO shareholders. In other
words, our shareholders have a significant degree of protection against our
overpaying by virtue of the market based nature of the majority of the
consideration that we pay.
In formulating our offer, we have benefited from the support of two major new
Asian shareholders, Temasek and China Development Bank. We have, as part of
this, entered into a strategic partnership with China Development Bank which
allows Barclays unprecedented access to the Chinese market, and to Chinese
companies as they do business around the world. This partnership, of itself, is
a very valuable step forward for us, and brings us significantly heightened
exposure to Asia that is so important to our strategy. The partnership with
China Development will continue, irrespective of the outcome of the merger with
ABN AMRO, as will our relationship with Temasek, who will be a valuable source
of guidance and advice to us as we grow our Asian businesses.
I made reference a moment ago to the terms on which we would be prepared to
proceed. We've always been very clear that the merger terms must satisfy our
economic tests, which are tough. That's why we have been consistent in promising
our shareholders that we will not lose sight of economic reality in our pursuit
of the merger objective. And putting that bluntly, that means being prepared to
walk away if we can't conclude the transaction on the right terms.
The shareholders of ABN AMRO will make their decision in early October. At that
time they will have to assess the value of our offer by reference, among other
things, to where our stock price is trading at the time, and to its potential to
increase in the future when markets return to normal. And they will also have to
assess the deliverability of the offer from the Consortium.
As things stand today, our bid is some five and a half Euros per share below
that of the Consortium. We have met many of ABN AMRO's shareholders over the
course of the last months. We've been clear in saying to them that they will
have an opportunity to tender their shares in response to our offer. We take
that commitment seriously. They have until 4 October, which is when our offer
closes, to make their decision. Meanwhile, as the stock market valuation of ABN
AMRO indicates, there are uncertainties in the period ahead for the Consortium.
The current value of ABN AMRO shares stands at a 8% discount to the Consortium
offer. So the stock market, which is seldom wrong about these things, is
indicating at the moment that the outcome is far from certain.
We are very grateful for the support that we have had from our shareholders
through the last months as we have examined and pursued the merger. We know that
that support depends on trust: trust that we will honour our commitments; that
we will deliver on our promises; that we will only proceed in circumstances
where it is economically rational to do so.
Before we take your questions, I want to give you a short update on current
trading. This is a time of uncertainty in the markets, where there has been
considerable turbulence over the summer. So it's a time when perhaps you, our
owners, would appreciate an update from us on how we've done during the summer.
We are, of course, conscious of our continuous obligation to update the market
on developments which are material. As we reported earlier this week, Barclays
Capital traded profitably in each of July and August and our expectation is that
it will continue to do so during the rest of the year. In saying that, I am, of
course, taking account of all costs, impairment and up to date market
valuations.
We feel confident that the growth rates through time that we have always
projected for Barclays Capital and Barclays Global Investors remain unchanged.
In relation to Barclays Global Investors and to Barclays Wealth, these two
businesses have been performing in line with our expectations since we last
updated you in early August. The underlying trends in our Global Retail and
Commercial Banking businesses - which we reported for the first half of the year
- have continued, excepting of course that July and August are often quieter
months because of the holiday season. Group Liquidity remains strong, and our
capital ratios are in line with our targets.
Good businesses should be capable of benefiting from mergers and acquisitions,
but they should not be dependent on m and a for development and growth. We
remain confident in our ability to generate good returns for our owners through
time, whatever the outcome of this chapter of our history.
So, ladies and gentlemen, I repeat the welcome of the Chairman, and I now hand
you back to him for the formal business of the meeting.
This information is provided by RNS
The company news service from the London Stock Exchange
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