ABN Amro confirms talks with Barclays

ABN Amro Holding NV, the Netherlands' largest bank, said Monday it was in early-stage talks about a "potential combination" with the British bank Barclays PLC.

The disclosure came amid reports that Barclays was eyeing a possible purchase of its smaller rival. The Wall Street Journal said in its online edition that the talks "could lead to a Barclay's acquisition valued at more than $80 billion."

In a statement, ABN said the talks were "exclusive preliminary discussions with Barclays PLC concerning a potential combination of the two organizations."

Barclays, which is significantly larger than ABN Amro, said Monday it would update the market on its position toward ABN by Tuesday.

If a deal is struck, it would be one of the biggest cross-border combinations in European banking history.

ABN shares rose 9.7 percent to close at 29.94 euros ($39.88), continuing a climb that began in December and accelerated in February, when hedge fund TCI said the shares were undervalued and management should split or sell the company.

TCI holds about 1 percent of ABN shares.

After Monday's rise, ABN Amro's market capitalization was about 57 billion euros ($76 billion).

Barclays shares dropped less than 1 percent to close at 677 pence ($13.15) in London.