Mergers between banks usually involve ironing out kinks from consolidation and rationalisation.

Mergers between banks usually involve ironing out kinks from consolidation and rationalisation.

But when Barclays and ABN Amro merge their Singapore operations, things should be a tad smoother for at least one reason - they already occupy contiguous areas in One Raffles Quay’s South Tower.

Office players are watching whether the two banks will give up any premises as they consolidate operations. Any space they return would help ease the office supply crunch.

At One Raffles Quay’s 29-storey South Tower, ABN Amro occupies about 190,000 square feet from levels 21 to 26, and Barclays has 90,000 sq ft on levels 27 to 29. ‘It’s quite a quirk. A neater fate to consolidate, if they intend to do that,’ quipped an office market watcher. ‘They have a reasonably nice, ready-made solution, whether by fault or design.’

Agreeing, another observer said Barclays stands to enjoy rental savings at One Raffles Quay from merging with ABN Amro, since the latter was the first tenant to sign up there back in 2004 and has locked in lower rent - probably below $4 per square foot (psf) a month. Barclays signed a lease the following year and could be paying ‘$6-plus psf’.

On Monday, Barclays agreed to buy Dutch rival ABN Amro for about 67 billion euros (S$137.7 billion) in shares. The two banks said the merger will result in about 23,600 job losses, or just over 10 per cent of their combined workforce. The job losses comprise a net staff cut of about 12,800 plus about 10,800 positions to be off-shored to low-cost locations.

In Singapore, Barclays now has about 1,500 staff. ABN Amro has about 1,250, with plans to grow this figure to 1,500 by year-end, according to a BT article last month.

Besides the 190,000 sq ft it occupies at One Raffles Quay, ABN leases 47,678 sq ft of backroom office space at Haw Par Technocentre in Commonwealth Drive.

Barclays’ other leased office premises besides One Raffles Quay are at Capital Square (more than 40,000 sq ft), The Atrium @ Orchard near Dhoby Ghaut MRT Station (about 80,000 sq ft) and Samsung Hub in Church Street (where Barclays recently signed a deal to lease more than 50,000 sq ft).

‘Most likely, the merged entity will keep at least two or three locations in Singapore for business continuity reasons,’ said the office-leasing head of a property consultancy.

If the duo do decide to give up some space at One Raffles Quay or elsewhere, this is expected to be snapped up quickly given the shortage of office space.

Such arrangements could involve Barclays or ABN Amro sub-letting excess space with approval from the landlords or returning the space to the landlords.

For some of the locations, including One Raffles Quay, the rental profit from sub-letting would go straight into the landlord’s pocket, market watchers reckon.

‘Generally, that would be the current market practice,’ an office-leasing consultant said.

Source: The Business Times, 25 April 2007