A consortium led by Royal Bank of Scotland boosted the cash component of its €71 billion (£48 billion) offer for ABN Amro by slightly more than €16 billion today after it revised the terms of its indicative proposal to buy the Dutch bank without its prized American division LaSalle.

The move means that the RBS-led trio of banks will finance about €66 billion of its ABN Amro bid in cash.

RBS will issue shares for the remainder, about €5 billion. This is almost a third of the €14.5 billion the Edinburgh-based bank had been expecting to issue.

The RBS team left the terms of its bid for ABN Amro unchanged, although it lopped €324 million off its expected cost savings to €1.3 billion as a result of the absence of LaSalle. The consortium has also stipulated that ABN Amro must not sell any further assets.

BACKGROUND

• RBS loses CDO executive and six others

• Electra agrees $345m Allflex deal with RBS

• RBS bumps up cash promise in ABN bid

• RBS promises revised ABN bid

• RBS says rival bid will cost more jobs

RBS comment: The Goodwin show

Who will end up running the show if RBS is successful in its bid for ABN Amro?

Related Internet Links

• Royal Bank of Scotland company information

• Royal bank of Scotland share price chart

• Royal Bank of Scotland forecast

Related Links

• Tempus: In the bank

• Barclays stalls on ABN bid

• RBS promises revised ABN bid

Today's bumper cash promise from the Edinburgh-based bank increases pressure on Barclays, the rival bidder, which has indicated that its €64bn offer will be all in shares and sparks a fresh round in the battle to become one of Europe's largest banking groups.

Both banks are set to launch formal offers by next Monday. Barclays is expected to sweeten its bid with a cash component.

Analysts at Bear Stearns said: "With the Consortium having the capacity to outbid Barclays and with the bid in its current form, we believe the RBS Consortium is the likely victor."

ABN Amro said that it was "examining the terms of the proposed offer".

If the Dutch bank wants to withdraw its recommendation for Barclays, it has to give the bank five days to come up with a better offer, under the terms of the merger protocol the two banks agreed in April.

RBS said: "The banks have received assurances from ABN Amro that their proposed offer will be dealt with on a level playing field."

John Varley, the chief executive of Barclays, said: "The consortium offer still faces considerable regulatory and shareholder hurdles. We remain clear that our offer will produce better long-term value for ABN Amro shareholders because the resulting combination will deliver excellent growth and ABN Amro shareholders will participate in the upside from that growth.

"We are also very clear that we will only proceed with this transaction on terms which produce the right results for our shareholders. We have high benchmarks for returns and we will not compromise them."

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