ABN ends backing for Barclays bid

AMSTERDAM, Netherlands (Reuters) -- Dutch bank ABN AMRO withdrew its recommendation for a takeover offer from Barclays, leaving it neutral on the competing offers from the British bank and the higher bid made by Royal Bank of Scotland's consortium.

The Netherlands' biggest bank, which faces a a 65.6 billion-euro ($89.55 billion) offer from Barclays and a 71 billion-euro offer from the consortium of RBS, Belgium's Fortis and Spain's Santander, also reported a 7.1 percent decline in its second-quarter net profit on Monday.

ABN originally backed Barclays when announcing their merger deal in April.

But it has now effectively withdrawn its recommendation even after Barclays sweetened its offer last week to include more cash.

ABN's boards -- the supervisory board and managing board -- said they were currently not in a position to recommend the offers from Barclays or the consortium.

"ABN AMRO will further engage with both parties with the aim of continuing to ensure a level playing field and minimizing any of the uncertainties currently associated with the offers with a view to optimizing the attractive alternatives available to ABN AMRO's shareholders," ABN said in a statement.

The RBS-led offer, which would result in a break-up of ABN, is more than 90 percent in cash and adds up to 38.1 euros per ABN share at current market prices -- against Barclays' bid at 34.7 euros per share.

Barclays sweetened its offer with a cash portion, as China Development Bank and Singapore's Temasek took stakes in the bank, but its offer remains mostly in shares, and therefore vulnerable to recent market turbulence.

Barclays is expected to hold out for some improvement in its share price and seek support at a later date.

ABN reported a net profit of 1.13 billion euros in the second quarter, down from 1.216 billion euros in the same period last year and the 1 billion euros average forecast in a Reuters survey of five analysts.

The figures exclude discontinued operations and include a 208 million-euro gain on disposals.

On a per-share basis, ABN reported earnings of 0.61 euro per share, and 0.50 euros per share from continuing operations.

Operating profit rose 12.8 percent to 5.45 billion euros.

ABN said it was on track to reach its goal of posting earnings per share of 2.30 euros for 2007, adjusting for disposals.

ABN increased its interim dividend to 0.58 euros, up 5.5 percent. E-mail to a friend

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