ABN Amro has withdrawn its recommendation of Barclays's €67.5 billion (£45.4 billion) offer for the Dutch bank as it reports a 1.4 per cent drop in profits in the first six months of the year.

ABN conceded this morning that the Barclays bid was 1 per cent below the bank's share price and 8.8 per cent below a €71 billion offer from a Royal Bank of Scotland-led consortium. Conversely, ABN said RBS's offer was 8.5 per cent above the Dutch bank's share price and 9.6 per cent ahead of Barclays's bid. If ABN chooses to recommend the RBS bid, it will have to pay a €200 million break fee to Barclays.

ABN said: "The boards are therefore, notwithstanding their support of the strategic benefits of the combination with Barclays, not currently in a position to recommend from a financial point of view the Barclays offer for acceptance to ABN Amro shareholders."

The bank has pledged to engage in further discussions with both Barclays and the RBS-led consortium "with the aim of continuing to ensure a level playing field".

ABN admitted this morning that RBS's bid was "attractive to shareholders" because of its large cash component. However, unlike its summation of Barclays's offer, ABN listed a number of risks related to RBS's deal, including "unresolved" questions about the break-up of the bank between RBS and its partners, Santander of Spain and Belgium's Fortis.

It also said that a "broadly" defined material adverse change clause contained in the consortium's bid "is more onerous and uncertain than the proposed equivalent Barclays clause".

In response to today's statement, John Varley, chief executive at Barclays, said: "We recognise that, at the current time, it is difficult for the boards of ABN Amro to make a clear recommendation to their shareholders.

"However, we are pleased to have their continuing support, and we are confident that our revised offer delivers the value, stakeholder benefits and certainty that will allow the boards to support a recommendation in due course."

Barclays will file a revised offer before August 6, which is the deadline by which ABN will have to recommend either offer.

The latest twist in the drama, which has been unfolding since April, came as ABN released its first-half results revealing that profits over the period fell from €2.25 billion to €2.22 billion. Total revenue grew by 12.6 per cent.

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