May 29 (Bloomberg) -- Royal Bank of Scotland Group Plc, Santander Central Hispano SA and Fortis offered 71.1 billion euros ($95.6 billion) for ABN Amro Holding NV, trumping Barclays Plc in the largest banking takeover.

The banks would pay 38.40 euros a share for the biggest Dutch lender, raising the cash portion to 79 percent from 70 percent in an earlier proposal, the group said today. That's 10 percent above the 34.87 euro all-stock offer from London-based Barclays.

The Royal Bank-led group pledged to cut costs by 4.23 billion euros by the end of 2010, 50 percent more than Barclays. The group plans to carve up the 183-year-old ABN Amro, which has operations in 53 countries stretching from the U.S. to Brazil to Italy. The outcome may hinge on winning ABN Amro's LaSalle Bank, the Chicago- based unit at the center of a court fight.

``It's going to be tough for Barclays to top this,'' said Dave Bradbury, who helps manage $13 billion in assets, including Royal Bank and Barclays shares, at Canada Life Ltd. in London. ``Maybe Barclays can find a partner.''

ABN Amro shares slipped 29 cents, or 0.8 percent, to 35.81 euros in Amsterdam. Fortis shares fell 0.3 percent to 31.21 euros in Brussels. Santander shares rose 1.3 percent to 13.93 euros in Madrid. Royal Bank shares dropped 0.8 percent to 637.5 pence in London, while Barclays rose 1.9 percent to 733.5 pence.

LaSalle at Center

Royal Bank Chief Executive Officer Fred Goodwin is seeking LaSalle to help compete with larger rivals in the U.S., where the Edinburgh-based bank generates about a quarter of pretax profit from its Citizens Financial Group, based in Providence, Rhode Island. Goodwin will also hold onto ABN Amro's Asian operations and its corporate banking business.

ABN Amro, based in Amsterdam, agreed on April 23 to be bought by Barclays, and to sell LaSalle to Bank of America Corp. for $21 billion. That accord was dealt a setback when an Amsterdam court ruled the LaSalle sale would need shareholder approval.

Today's offer for ABN Amro is conditional on the Dutch courts upholding the LaSalle ruling and shareholders rejecting the sale to Charlotte, North Carolina-based Bank of America. The bidding group said it plans to set aside about 1.85 billion euros of the offer price ``pending resolution of the LaSalle situation.''

``There is clearly a large dosage of conditionality in this offer due to the unresolved matter concerning LaSalle,'' Ryan Palecek, an Amsterdam-based analyst for Kempen & Co., wrote in an investor note today.

More Bidders?

Goodwin, on a conference call with reporters today, said talks with Bank of America about resolving the LaSalle matter were ``professional and amicable,'' but are no longer taking place. The 48-year-old CEO added that ``it would be rash to think'' no other bidders will emerge for ABN Amro.

``As a matter of corporate policy we do not discuss conversations or negotiations,'' Bank of America spokesman Scott Silvestri said in an e-mailed statement.

ABN Amro rejected a $24.5 billion approach for LaSalle from the Royal Bank-led group on May 7, an offer contingent on an agreement to buy the rest of the company.

Buying ABN Amro would help Santander, Spain's No. 1 bank, expand into Italy and double its market share in Brazil, where it's the second-largest foreign-owned bank behind ABN Amro. The purchase would be the biggest for Chairman Emilio Botin, 72, surpassing the 9.2 billion-pound ($18.2 billion) takeover of U.K. mortgage lender Abbey National in 2004.

Fortis, based in Brussels and Utrecht, the Netherlands, is seeking the Dutch retail and commercial banking arm and ABN Amro's asset-management and private bank units to create a ``top European financial institution,'' the bank said today.

Capitalia Stake

ABN Amro owns Banca Antonveneta in Italy, Banco Real in Brazil and a 9 percent stake in Rome-based Capitalia SpA, which has agreed to be bought by UniCredit SpA, Italy's biggest bank. Goodwin said the group would ``liquidate'' the Capitalia stake.

``The banks would still welcome the opportunity of agreeing with ABN Amro and Bank of America a way forward that meets the interests of shareholders, employees and other stakeholders of all parties,'' the Royal Bank-led group said in the statement.

The Royal Bank-led group said fewer employees are expected to lose their jobs than with Barclays' proposal. Barclays said last month it will slash about 12,800 jobs and shift 10,800 positions to India and other lower-wage countries.

``We are looking into the offer,'' said Albert Holtzappel, a spokesman for ABN Amro.

Royal Bank will pay 27.2 billion euros, Fortis 24 billion euros and Santander 19.9 billion euros in the transaction, the statement said.

Merrill's Roles

To finance the purchase, Royal Bank will issue about 15 billion euros of new stock to ABN Amro shareholders, and raise an additional 6 billion euros of capital. Fortis plans to raise 15 billion euros by selling shares in a rights offer and as much as 5 billion euros in additional capital. It will also ``release'' up to 8 billion euros by selling assets and securities. Santander intends to raise as much as 10 billion euros through a rights offer and the sale of mandatory convertible securities.

Merrill Lynch & Co., together with ``certain other major international financial institutions,'' will arrange the securities sales, the banks said. Merrill is also advising the Royal Bank-led group on the merger. Greenhill & Co. and Fox-Pitt, Kelton Ltd. are advising Fortis, while Santander is working with its own bankers and NIBC Bank NV.

ABN Amro is being advised by Lehman Brothers Holdings Inc., Morgan Stanley, N.M. Rothschild & Sons Ltd., UBS AG and its own investment bank.

The Dutch parliament plans to meet June 5 on the ABN Amro takeover, according to a statement on its Web site.

Higher Offer?

Barclays CEO John Varley, 51, has said he wants to create ``one of the best banks in world'' by joining with ABN Amro. He has contrasted his offer to the ``deconstruction'' of ABN Amro proposed by the Royal Bank group ``into heaven knows how many parts.''

``There is nothing surprising in today's development,'' Varley said in a letter to employees today that was confirmed by Barclays. ``We will be reviewing the detail,'' of the group's proposal, he added. Barclays said last week it was making ``excellent progress'' with regulatory filings related to its bid.

Royal Bank's Goodwin beat Edinburgh-based rival Bank of Scotland in 2000 for National Westminster Bank Plc. NatWest shareholders accepted Royal Bank's hostile 23.6 billion-pound ($46.8 billion) offer after a five-month battle.

``Barclays probably will make a higher offer, but they will have to justify the synergies,'' said Edward Collins, a London- based fund manager who helps oversee about $41 billion at New Star Asset Management Group Plc in London. ``40 euros a share would be a bit too much. If Barclays start to sell bits and pieces of the business it would undermine the rationale for doing the deal.''

Up for Sale

A purchase by the Royal Bank-led group would be the third- biggest takeover behind America Online Inc.'s $186 billion acquisition of Time Warner Inc. in 2000 and Vodafone AirTouch Plc's $185 billion merger with Mannesmann AG in 1999.

ABN Amro CEO Rijkman Groenink put the lender up for sale after London-based hedge fund TCI Fund Management LLP called for a breakup of the bank in February. At the annual shareholder meeting in April, more than two-thirds of ABN Amro shareholders backed a TCI motion urging management to consider selling or splitting up the company. A spokesman for TCI declined to comment.

``Based on the current offers, it's likely the shareholders will prefer the consortium's proposal,'' the Dutch shareholder association VEB said in an e-mailed statement. ``That will be different if Barclays would raise the current bid considerably.''

The Royal Bank-led group said it currently expects the offer for ABN Amro to begin by August 13 and to conclude in the final three months of the year. The bidders plan to make a further statement about the transaction with an updated timetable on or before the week of July 2.

To contact the reporter on this story: Ben Livesey in London at blivesey@bloomberg.net; Jon Menon in London at Jmenon1@bloomberg.net.

Last Updated: May 29, 2007 12:10 EDT