The real driving force in the battle for ABN

Most of the young men working on ‘hedge fund alley’, the narrow streets leading away from Berkeley Square in Mayfair, have expensive but unsinister ambitions. They’d like a new Aston Martin DB7, preferably convertible. They’d like a swanky new penthouse overlooking the Thames, plus a girlfriend who might have stepped out of the pages of Vogue. They certainly aren’t setting out to re-draw the industrial map of Europe; but the law of unintended consequences applies as much to business as to any other field of human endeavour, and that is what they appear to be doing.

Over the last few weeks, the City and the business press have been held in thrall by the battle for control of the Dutch bank ABN Amro. Barclays has already tabled a E64 billion offer, to which the Dutch have reluctantly agreed. The combined group would have a value of around $160 billion, making it the sixth largest bank in the world. But the deal has been crashed by Royal Bank of Scotland’s combative chief executive Sir Fred Goodwin. Right now, both British banks are slapping offers on the table like drunken poker players. Who’ll win? It’s anyone’s guess.

It would be easy to portray the battle for ABN as a replay of the great takeover battles of the 1980s and 1990s — an epic struggle for control of a trophy asset between mighty corporations and powerful chief executives. Most of the coverage slips, as if on autopilot, into that groove. But there is a crucial difference between this and any previous clash of corporate egos. This contest was started by a tiny London-based hedge fund. It is a cautionary tale about how corporate power in Europe is shifting — and leaving the traditional power-brokers of big business, public-company bosses and their advisers in the mainstream investment banks, bewildered, confused, struggling to keep up with the plot.