The Day the City Struck a Blow for Britain; Barclays' Bid for Dutch Bank ABN Amro Bucks the Trend of Foreign Takeovers of British Firms - and Highlights London's New Dominance

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AFTER yesterday's news on the latest City mergers, it's hard to know what i s

worse: being a financial regulator in Holland or one in New York.

They don't have to answer there is only one place to be and that's here, in London.

Four proposed cross-border mergers made the headlines on one day, all of them involving UK firms acquiring foreigners: Barclays buying ABN Amro for [pounds sterling]45.6 billion; AstraZeneca going for MedImmune of the US for [pounds sterling]7.6 billion; British Airways stalking Spain's Iberia; and Imperial Tobacco having its offer for Spain's Altadis, maker of Gitanes and Gauloises, rejected but almost certainly preparing a hostile bid.

It was "merger Monday" and if ever confirmation was needed that London is eclipsing every other financial centre on the planet at present, this was it.

There has never been a time like this in the City and, thus, in London. While sceptics worry about a bubble about to burst there is no sign of any end to the activity the money, the deals (and with them, the bonuses, soaring house prices and a widening gap between rich and poor) keep on coming.

Traditionally, the institutional investors who run UK plc have been nervous about foreign shopping trips this nation's corporate history is littered with examples of companies that came unstuck abroad. But the same feeling was not shared by shareholders in businesses based abroad (some, as in Spain, even enjoy tax breaks if they plunder other countries). The result was a deluge of recent bids for British companies.

And while they were justified on the grounds that the UK is an open market and we don't want to deter overseas entrants, there was a depressing aspect to it: everything, it would appear, was up for grabs from our airports to historic, famous brands to the London Stock Exchange (LSE).

There is a tendency to suppose that as we were on the receiving end, we had done something wrong. The truth was frequently the reverse.The City always knew that one of the reasons some of our businesses headed international shopping lists was that they were extremely well-managed.That is why Pilkington was bought by Nippon Sheet Glass, why BAA fell to Ferrovial of Spain and O2 was grabbed by Telefonica, also from Spain. UK success also lay behind the abortive effort of Nasdaq to snaffle the Stock Exchange the Americans didn't want to buy the LSE because it was doing badly but because it was doing so well.

Despite the onslaught, the mood never dipped there was anger and bafflement that so much of our heritage was up for sale but the City shrugged its shoulders. Yesterday, on St George's Day, there was a shift. Spain may own our airports, but we might get their airline.

And the super-sleek Dutch who, as we meet them on our holidays, always manage to make us feel second-best, may think they've got it all but we will possess their bank. Nothing was guaranteed to raise the spirits more than Barclays' tilt at ABN Amro, and the key, symbolic flag-waving point in the takeover, that the new combined entity will be subject to regulation here in London by the Financial Services Authority.

When the deal was first broached, there was talk that the new banking Goliath, with 47 million customers, would come under Dutch rule. Barclays, anxious not to ruffle Dutch pride, was prepared to let them act as supervisors. …


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