Barclays' proposed takeover hit by US 'investigation' into ABN

Barclays' proposed £40bn take-over of ABN Amro ran into further trouble this weekend, as it emerged that the Dutch bank could be the subject of an ongoing investigation by the US Department of Justice.

Although ABN is believed to be working towards a settlement with the US authorities, it is understood Barclays is seeking reassurance that the matter will be resolved before it makes a formal bid for the bank. ABN granted Barclays a 30-day exclusivity period on 18 March, which runs out next week.

It is not known exactly what the investigation into ABN relates to. However, it is not the first time the bank has been investigated by the US authorities. Two years ago, financial regulators in New York and Illinois landed ABN with an $80m (£41m) fine for breaching US money-laundering laws, and for failing to observe sanctions against Iran and Libya.

Meanwhile, speculation that Barclays may face a rival bid for ABN was heightened yesterday, after the President of Holland's central bank. Nout Wellink, suggested he would not necessarily stand in the way of a break-up of the Dutch bank. Earlier this year, Mr Wellink criticised The Children's Investment Fund - an activist hedge fund - for calling for a break-up of the Dutch bank, describing the suggestion as a "bridge too far". But in an interview over the weekend, he said he would not object in principle to a bidder buying ABN and then selling off parts of the bank, increasing the likelihood that a rival bidder may emerge.

It is thought Royal Bank of Scotland may be more attracted to ABN - and may be able to pay a higher price than Barclays - should it be permitted to sell off parts of the business after the transaction was completed.

However, it is believed RBS has also been in talks with Santander Central Hispano, the Spanish banking giant which owns Abbey, with a view to potentially mounting a joint bid for ABN. Reports at the weekend suggested RBS has been using the threat of a counter-bid to try to persuade Barclays to sell it ABN's US retail operations - notably the Chicago-based bank LaSalle - should it successfully take over the company.

The rival Dutch bank ING is also believed to be considering a counter-bid for ABN after its advisers Goldman Sachs quit last week. Goldman is understood to have quit as adviser to ING so as to leave it unconflicted in its dealings with RBS, whom it also advises.

Barclays and ABN declined to comment yesterday. A spokesman for the US Department of Justice said he could "neither confirm nor deny the existence of a criminal investigation" into ABN.