Royal Bank of Scotland was confident last night that its £49bn consortium bid for ABN Amro was on track to go to the Dutch bank's shareholders for approval, after a weekend of last-ditch negotiations in Amsterdam intended to pave the way for a deal.
Talks on Friday night failed to achieve a breakthrough, and RBS's chief executive Sir Fred Goodwin on Saturday tabled a proposed £12bn cash bid for La Salle, ABN's prize US asset now in a tug-of-war between RBS and Bank of America.
The US bank's waiting or "go shop" period, after the provisional acceptance of its friendly £10.5bn bid for La Salle, ran out early today, after a frenetic final 24 hours of negotiations between ABN and RBS over its counter-bid.
A source close to ABN said last night: "The bid is highly conditional, but it looks as though we are making some progress."
An RBS source said: "The go shop period expires at 5am, so between now and then we have got to get to the check-out."
The ABN Amro supervisory board was meeting at 6pm yesterday, to decide whether or not it could accept RBS's preferred option: a La Salle bid conditional on acceptance of a £49bid for the whole of ABN from the consortium which brings Belgian and Spanish banks Fortis and Santander into the deal.
The overall bid would be worth e38.40 a share - e27 in cash and e11.40 in new RBS shares - some 13% above the e35 value of the bid from Barclays which precipitated the bidding war.
A Dutch court last week ruled that any sale of La Salle must be put before ABN shareholders, prompting a lawsuit from Bank of America in Chicago on the grounds that its sale contract stated otherwise. It means that ABN is obliged to consider counter-bids.
Barclays sources claim that the RBS consortium is struggling to guarantee the acquisition price, because it will depend on successful rights issues by both Fortis and Santander in the fourth quarter of 2007, aimed at raising some e40bn (£27bn).
"Otherwise it's like agreeing to sell your house to someone who hasn't actually got a mortgage offer yet," said an ABN Amro source. But he added that the Dutch bank's negotiators were "working hard" to try to achieve a result.
The RBS source commented: "The financing is in place. You can rest assured that we would give those assurances." The equity financing is understood to be fully underwritten by Merrill Lynch. In the event of the ABN board being unwilling to accept the validity of the conditional bid for La Salle, Goodwin last night had a second bid in his pocket: an unconditional cash bid for the US asset.
That would only require beating Bank of America's offer, which it does, but it would also run the risk of being trumped by the US bank, whose agreement allows it a five-day period in which to lodge a winning offer.
Failing to land La Salle unilaterally would scupper the rest of the plan, though landing it might pave the way for a simplified consortium bid. RBS is said to be keen on ABN's Asian assets, while its Italian and Brazilian units would go to Santander and its Benelux business to Fortis.
Keefe, Bruyette & Woods, the investment bank, claims that the Dutch court's ruling could now open the way for HSBC, BNP of Italy or ING of the Netherlands to show their hands and push the bid price as high as e45.
Some analysts suggest RBS may need to bolster its balance sheet by as much as £7bn following an ABN takeover to meet regulators' solvency requirements, prompting a report yesterday that investment bankers had been touting its UK insurers Direct Line and Churchill for an £8bn sale.
A bank spokesman said: "We have no plans to dispose of Direct Line or Churchill."