Barclays has formally abandoned its €67.5 billion bid to buy ABN Amro, handing control of the Dutch bank to a consortium led by Royal Bank of Scotland.

After a board meeting this morning to finalise its decision, Barclays acknowledged that it had secured acceptances from just 4.4 million shares, equivalent to less than 1 per cent of ABN shareholders. It had needed at least 80 per cent.

"As a result, Barclays withdraws its offer with immediate effect," the bank said. Barclays' shares rose 2p to 657p.

Barclays said that it had asked ABN Amro to pay out the €200 million break fee agreed in March, when the deal was first struck. ABN confirmed that it will make the payment.

Barclays also said that it would cancel its share buyback programme, aimed at pushing up the value of its mainly share-driven offer. It said the break fee would "significantly exceed" its costs.

With pressure on the board expected to be fierce, Barclays defended its strategy and executives' handling of the ill-fated ABN merger.

Marcus Agius, the chairman, said: "The board is proud of the way Barclays senior management conducted the campaign for ABN Amro. We remain commited to continuing our successful strategy of Earn, Invest and Grow."

The winners, Royal Bank of Scotland (RBS) and its consortium partners, Santander, of Spain, and Fortis, of Belgium, have until October 19 to declare their bid unconditional.

However, the three banks will spend the next few days counting acceptances from ABN Amro's shareholders and are expected to declare the deal unconditional by the middle of next week at the latest.

Shares in RBS rose by 1.15 per cent to 569.5p in early trading.

RBS is hoping to secure 80 per cent of shareholders' acceptances, but it has reserved the right to accept a lower percentage of the votes.

Barclays' six banking advisers will miss out on at least £400 million in fees because the majority of their payments rested on the success of Barclays' bid.

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