14th Sep 2007 10:04
Barclays PLC14 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 ourearnings base. That means maximising the alignment between Barclays and growthin 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 setout 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 theuniversal bank of today. By developing world class capabilities in Barclays wehave been able to redefine the growth opportunity for our shareholders. Andwe've also been able to redefine the geographical footprint on which we canlegitimately expect to compete successfully. This strategy has delivered strongly. Group profits have doubled as thepercentage 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 theindustry 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 ahandful of universal banks leading the global industry. And that's why we decided to pursue the ABN AMRO opportunity when it presenteditself. 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 ofstrategy implementation. That's why it has been right for us to pursue this opportunity and that is whyit's right for us, on the right terms, to seek to conclude the mergersuccessfully. Together with the people of ABN AMRO we would be creating acompetitive force that would, by dint of brand, physical footprint andcapability, be very well equipped to take market share in a growing market. The standalone Barclays offers significant growth to our shareholders throughtime. A successful merger with ABN AMRO would create incremental growth beyondthat. Although we are committed to capturing, through the merger with ABN AMRO, thecost synergies which we've announced the opportunity is not a cost basedopportunity. The real opportunity is a revenue based opportunity, driven bycombining two strong franchises, with great customer and client relationshipsaround 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 withBarclays offers growth, certainty and deliverability. Most of the offer consideration will be delivered in Barclays stock. As thevaluation 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 otherwords, our shareholders have a significant degree of protection against ouroverpaying by virtue of the market based nature of the majority of theconsideration that we pay. In formulating our offer, we have benefited from the support of two major newAsian shareholders, Temasek and China Development Bank. We have, as part ofthis, entered into a strategic partnership with China Development Bank whichallows Barclays unprecedented access to the Chinese market, and to Chinesecompanies as they do business around the world. This partnership, of itself, isa very valuable step forward for us, and brings us significantly heightenedexposure to Asia that is so important to our strategy. The partnership withChina Development will continue, irrespective of the outcome of the merger withABN AMRO, as will our relationship with Temasek, who will be a valuable sourceof 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 toproceed. We've always been very clear that the merger terms must satisfy oureconomic tests, which are tough. That's why we have been consistent in promisingour shareholders that we will not lose sight of economic reality in our pursuitof the merger objective. And putting that bluntly, that means being prepared towalk 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 thattime they will have to assess the value of our offer by reference, among otherthings, to where our stock price is trading at the time, and to its potential toincrease in the future when markets return to normal. And they will also have toassess the deliverability of the offer from the Consortium. As things stand today, our bid is some five and a half Euros per share belowthat of the Consortium. We have met many of ABN AMRO's shareholders over thecourse of the last months. We've been clear in saying to them that they willhave an opportunity to tender their shares in response to our offer. We takethat commitment seriously. They have until 4 October, which is when our offercloses, to make their decision. Meanwhile, as the stock market valuation of ABNAMRO 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 Consortiumoffer. So the stock market, which is seldom wrong about these things, isindicating at the moment that the outcome is far from certain. We are very grateful for the support that we have had from our shareholdersthrough the last months as we have examined and pursued the merger. We know thatthat support depends on trust: trust that we will honour our commitments; thatwe will deliver on our promises; that we will only proceed in circumstanceswhere it is economically rational to do so. Before we take your questions, I want to give you a short update on currenttrading. This is a time of uncertainty in the markets, where there has beenconsiderable turbulence over the summer. So it's a time when perhaps you, ourowners, 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 marketon developments which are material. As we reported earlier this week, BarclaysCapital traded profitably in each of July and August and our expectation is thatit will continue to do so during the rest of the year. In saying that, I am, ofcourse, taking account of all costs, impairment and up to date marketvaluations. We feel confident that the growth rates through time that we have alwaysprojected for Barclays Capital and Barclays Global Investors remain unchanged.In relation to Barclays Global Investors and to Barclays Wealth, these twobusinesses have been performing in line with our expectations since we lastupdated you in early August. The underlying trends in our Global Retail andCommercial Banking businesses - which we reported for the first half of the year- have continued, excepting of course that July and August are often quietermonths because of the holiday season. Group Liquidity remains strong, and ourcapital 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. Weremain confident in our ability to generate good returns for our owners throughtime, whatever the outcome of this chapter of our history. So, ladies and gentlemen, I repeat the welcome of the Chairman, and I now handyou back to him for the formal business of the meeting. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Barclays