London School of Commerce
BARCLAYS PLC AND ABN AMRO CASE STUDY
As one of the world’s leading banks, with 135,000 employees in more than 50 countries, Barclays plays a significant role, from working with governments on major infrastructure projects to bringing banking to customers in emerging markets. Barclays is made up of two major businesses: Global Retail and Commercial Banking (GRCB) and Investment Banking and Investment Management (IBIM). There strategy is to achieve growth through time by diversifying their profit base making their growth relevant to their customers at all times. This case study will seek to examine the bid and intended acquisition of ABN AMRO, and the early acquisition of Banco Zaragozano by Barclays, the differences in performance of these two banks based upon the strategic a economic motives, focusing on the merger acquisition, and strategy implemented to effect improvements to reflect the results from 2002- 2006.
1. Evaluate Barclays strategy over the period of the case and prior to the ABN bid, paying particular attention to the global industry drivers and the group´s performance from 2002-2006.
In order to understand the context that helps to formulate the strategic performance changes at Barclays PLC over and prior bid for ABN AMOR. Barclay´s’ origins can be found back in 1690 to John Freame and Thomas Gould. The named changed to its present form when James Barclay became a partner in 1736. Presently, Barclays is the third largest bank in the United Kingdom. The institution’s primary focus is in retail banking, investment banking as well as investment management. Barclays operates in 60 countries with major point of interest in Europe, the United States, Asia, and Africa. Barclays is one of the ten largest banks global when measured by market capitalization (Barclays PLC, 2004). The institution’s core business revolves around retail and investment banking, and it is the later that is being impacted by forces acting upon liberal market economies in varied European Union member states as a result of the aforementioned introduction of the Euro as well as globalization. As a result of the preceding, Barclays services the United Kingdom market as well as providing services to multinational companies located in differing market models.
The bank’s strategy is to offer a full portfolio of services worldwide, providing a wide range of cross-selling opportunities, in order to achieve good growth through time by diversifying its business base and increasing its presence in markets and segments that are growing rapidly. This is driven by the Group’s ambition to become one of a handful of universal banks leading the global financial services industry, helping customers and clients throughout the world achieve their goals. Moreover, the strategy of the bank is based on the principles of earn, invest and grow.
Aligning business drivers with strategic options.
The strategic options examined by Barclays were further direct investment or outsourcing to a ‘partner’ bank and these were considered in the context of the bank’s key business drivers. These were:improving their operating model for trade processing; reducing the costs of their trade business in relation to people, infrastructure and services; improving their trade service capabilities and establishing a workable, non-competing, long-term ‘partnership’.
After considering all of the options, including a Joint Venture partnership, Barclays decided to outsource the processing aspect of its trade services offering to ABN AMRO and to focus on delivering enhanced client service. Performance
Nowadays, the proliferation of banking consolidation within the industry is and has created a new era of international banking conglomerates in the global industry. The preceding is causing European based banks to appear small in terms of relative comparison. Barclays´ operation...