Mumbai: A group led by Royal Bank of Scotland is set to acquire ABN Amro after UK''s Barclays dropped its bid for the Netherlands'' biggest bank.

Barclays said it would withdraw from the bid battle as it failed to win the backing of shareholders controlling 80 per cent of ABN''s shares. Barclays, the original suitor for the Dutch banking group, said it had received only 0.2 per cent of ABN shares by the time its offer closed on 4 October.

Barclays, however, will receive a euro 200 million "break fee" from ABN, which the bank said significantly exceeds the cost of the bid.

Analysts believe the $98.5 billion (euro 71billion / £49billion) RBS offer would prevail, since it has a much larger cash element. RBS is partnering Dutch-Belgian Fortis NV and Spain''s Banco Santander for the bid.

The outcome was expected as Barclays, which offered more in shares for ABN, saw its bid slip behind euro 71 billion following a fall in its share price.

Barclays was originally the preferred suitor as it planned to keep the business intact, but ABN switched to a neutral stance after the gap between the two bids widened.

Barclays, which is now focusing on organic growth, said it would restart a share buyback programme worth up to 1.55 billion pounds ($3.16 billion). This would help Barclays, itself a takeover target, to ward off such an eventuality.

ABN has more than 4,500 branches across 53 countries and devouring it won''t be an easy task for the RBS group. Analysts also see the complex deal as an extension of the banking M&A excesses.

RBS had earlier beat integration targets with its 21 billion pound acquisition of larger rival NatWest in 2000.

If the deal goes through, RBS will get ABN''s wholesale and investment banking unit and its Asian businesses. Santander will get ABN''s Italian and Brazilian operations, while Fortis will get its Dutch business, as well as its wealth and asset management operations.

RBS will pay almost 16 billion euros for its ABN businesses, including euro 4.5 billion in shares and the rest from funds already raised. Fortis and Santander will pay euro 24 billion and euro 19.5 billion, respectively from rights issues and with cash raised from disposals or in capital markets.

The consortium has already made some savings on the cost of the deal by buying up 8 per cent of ABN in the market at prices below the offer price.