British bank Barclays and Dutch bank ABN Amro yesterday announced they had agreed to merge to create the world's fifth-largest banking group in a deal worth US$91 billion (Bt3.17 trillion).

The merger, which will give Barclays' shareholders 52 per cent of the combined group, is the largest in the financial sector that the world has ever seen and caps month-long talks between the two companies.

ABN Amro runs a full branch in Thailand. Its representative declined to comment on whether the deal would lead to operating changes here. "We are waiting for the official statement from the regional office. Until then, we cannot comment on whatever changes it may introduce," she said.

The Dutch bank had earlier tried to expand its presence here through Bank of Asia, but it later sold its majori-ty stake to Singapore's United Overseas Bank, which later renamed Bank of Asia as United Overseas Bank (Thai).

Barclays has no banking operations in Thailand.

The proposed new merged entity will have a combined workforce of more than 215,000 staff and 47 million customers worldwide.

It will retain the name Barclays, but its headquarters will move from London to Amsterdam, where ABN Amro is based. Barclays' CEO John Varley will lead the new group.

The deal, announced in London and the Hague and expected to be completed in the fourth quarter, values the Dutch bank at ¤36.25 a share, 33 per cent more than the price on the last trading day before the talks began and slightly less than last Friday's closing price of ¤36.29.

Barclays' shares declined more than 2 per cent on the news, trading at £7.31 in London, as the market queried whether the envisaged synergy savings would be achieved.

The two banks said they hoped to cut 12,800 staff from the current payroll and transfer 11,000 jobs to low-cost countries.

As part of the sale, Bank of America Corp will acquire ABN Amro's Chicago, Illinois-based LaSalle Bank Corp for about $21 billion.

The deal by Britain's third-largest bank will create Europe's second-largest bank in market value, behind HSBC Holdings. The new merged bank will have 8,200 branches from India to South America.

The announcement came after a consortium made up of the Royal Bank of Scotland Group (RBS), Spain's Santander Central Hispano and the Dutch-Belgian financial house Fortis also said it was interested in taking over ABN Amro and splitting it up.

After criticism from the Dutch central bank that the transaction was too complex and risky, reports said RBS would consider mounting a bid on its own.

Describing the proposed deal as a unique opportunity, Varley said, "Our combined geographic reach will ensure exposure to both developed and high-growth developing economies."

He expressed confidence the merged group, which ranks fifth after Citigroup, Bank of America, HSBC and the Industrial and Commercial Bank of China, would grow.

ABN Amro chairman Rijkman Groenink said, "The deal will create a very strong universal banking company. The view of the board is that Barclays is the best partner for ABN going forward."

He predicted a "steep change in growth and earnings".

Groenink added, however, that he was to meet RBS representatives later last night to compare any offer with that from Barclays.