Sources close to ABN Amro, the largest Dutch bank, said: "One bidder is the TSB, the other is a blue-chip operation. The cultural make-up of the Barings individuals suggests they would prefer ABN Amro.
"Clearly, ABN Amro wouldn't have come back to the table unless they had been encouraged to do so by various parties," said the source.
In the days after rescue talks for Barings failed the weekend before last, ABN Amro had led the bidding, with its eyes set on Barings' corporate finance and fund management operations. Then on Thursday ING sent in a team of four top executives to London and won exclusive rights to negotiate with the administrators.
ING won this concession because it was the only bidder willing to buy the whole of Barings, thus avoiding potential litigation from Barings' clients.
ABN Amro responded on Saturday by joining Wall Street broker Smith Barney to launch a new bid, as the exclusivity agreement had run out on Friday night.
Under the renewed bid Smith Barney would take Barings' securities side off ABN Amro's hands. ABN Amro was formed by a merger in 1990 and is the biggest foreign bank in the US. In 1992 it bought Hoare Govett, the UK broker, and the partnership has proved successful. The Dutch have had a hands-off approach and allowed the UK management to build the business. Many within Barings would be happy to link with Hoare Govett.
But ING is not the "TSB with bits of emerging markets" that some critics say, according to analysts. It is conservatively but profitably run, earning as much from insurance as from commercial and retail banking, and has a flourishing private banking and corporate finance business in Latin America and Asia.
The main problem for ING is that, although chief executive Aad Jacobs and his team have keen international ambitions, the purchase of Barings would be a huge risk, requiring some form of extra equity funding, perhaps even a rights issue.
Significantly, sources on both sides of the bid war rubbished suggestions that about £100m of bonuses promised to Barings employees before the crash were holding up sales talks. According to both sides bonuses were not even being discussed.
A source close to ABN Amro said: "It's not much of a barrier. There are some really good people there who need to be incentivised." And a Barings source said the idea was "complete bunk". It was widely acknowledged that key Barings people would have to be paid the going rate to retain them, and that meant that some of the bonuses would be paid in full.
Sources were less forthcoming on whether certain key Barings executives would be axed. Andrew Tuckey, head of the corporate finance arm, and Peter Norris chief executive of the stockbroking arm, have come under fire, while Ron Baker, the head of futures and options trading to whom Nick Leeson reported, has been criticised.Reuse content