In the world's biggest-ever financial services takeover, the United Kingdom's third largest bank Barclays will buy out Dutch rival ABN Amro Holding for $91 billion (Euro 67 billion) in a cash and stock deal.

Barclays will add thousands of new employees to its India headcount following this takeover.

The deal, the biggest ever M&A in the financial services space, would create the largest institutional asset manager and the world's eighth largest wealth manager but will result in over 12,000 job cuts at the two banks' operations across the world.

However, India will be a net gainer in terms of jobs as well as expanded operations of the two banks.

While the number of new jobs have not been disclosed, sources close to the development pegged the figure at anywhere between 8,000 and 10,000.

"Part of the expected staff reduction will be through establishing shared services and off-shoring those positions to low cost locations, such as India, where new staff will be recruited at ABN Amro's existing ACES operations," ABN Amro and Barclays said in a joint statement.

The duo said they have identified the possibility of rationalising the number of staff of the combined group through a combination of natural attrition, off-shoring and outsourcing as well as redundancies.

While the two banks were silent on the exact employee additions in India, sources said that a majority of the new jobs would be moved to a low cost location like India.

Besides, the two banks will go ahead with their previously announced hiring plans as they see India as a huge opportunity going forward.

Barclays Plc, Britain's third-largest bank, agreed this morning to merge ABN Amro Holding NV with itself and the proposed merger would be implemented through an exchange offer pursuant to which ABN Amro ordinary shareholders would receive 3.225 ordinary shares in Barclays (new Barclays shares) for each existing ABN Amro ordinary share.

Under the terms of the offer, Barclays' existing ordinary shareholders would own approximately 52 per cent and ABN Amro existing ordinary shareholders would own approximately 48 per cent of the combined group.

In a joint press statement on Monday, the two banks said that each of their boards had unanimously resolved to recommend the transaction to their respective shareholders. The holding company of the combined group will be called Barclays Plc. The bank's headquarters will be in the Netherlands.

Barclays offered $49.25 for each ABN share. As part of the deal, ABN announced it is selling its US unit LaSalle Bank to Bank of America Corp for $21 billion in cash.

John Varley, who will be the chief executive of the new group, said the deal was worth $91.16 billion. Bob Diamond will be president, and Arthur Martinez, chairman of ABN Amro's supervisory board, will be the chairman.

Varley called it 'largest merger ever in global financial industry.'

"The proposed merger of ABN Amro and Barclays will create a strong and competitive combination for its clients with superior products and extensive distribution," the banks said in a statement. "The merged group is expected to generate significant and sustained future incremental earnings growth for shareholders."

The merger would create a single bank with 47 million customers globally.

The group said it expected to save $4.8 billion annually in synergies by 2010. Some 12,800 jobs will be chopped from the combined workforce of 217,000, and another 10,800 positions would migrate to cheaper locations.

Barclays was forced to pay more as a consortium led by Royal Bank of Scotland was also in the hunt to buy out ABN Amro. -- PTI & Agencies

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(Above) Head of Barclays John Varley (left) with ABN Amro CEO Rijkman Groenink (right) before a press conference at ABN Amro headquarters in Amsterdam. Barclays has agreed to buy rival ABN Amro for $91.16 billion.

Photograph: Marcel Antonisse/AFP/Getty Images