Banking giant Barclays last night confirmed it is in exclusive talks with Dutch bank ABN Amro about a potential £80 billion merger.

The bank issued a state-ment to confirm discussions were taking place with ABN Amro but stressed they were still only at an early stage.

The statement said: "Further to its announcement this morning, Barclays PLC confirms that it is in exclusive preliminary discussions with ABN Amro concerning a potential combination of the two organisations which will create value for both sets of shareholders.

"These discussions are the result of careful consideration to create a highly complementary partnership.

"The talks are at an early and exploratory stage and there can be no certainty that they will lead to a transaction.

"A further announcement will be made in due course."

If agreed, the tie-up would create a bank with 47 million customers and more than 220,000 staff worldwide.

It would help Barclays overtake Royal Bank of Scotland to become the UK's second largest bank and create a rival to the world's two largest banks, Citigroup and HSBC.

Shares in ABN AMRO - The Netherlands' biggest bank - yesterday hit a record.

As speculation of a takeover or break-up of ABN AMRO intensified, Barclays approached its Dutch counterpart with a merger blue-print that would create a global bank worth £83.3 million.

Barclays, Britain's third-biggest bank and with a big presence in Europe and Africa, clarify its position before stock markets opened today with the statement last night.

The statement indicated its interest in ABN, which owns large retail banks in the US, Brazil, Italy and The Netherlands.

Several other banks, including Dutch rival ING, Spain's BBVA and France's BNP Paribas have also expressed interest - directly or through advisers - in either exploring a full merger with ABN AMRO or buying some of its large non-Dutch businesses.

ABN has come under pressure from investors, including hedge fund TCI, to consider a sale or break-up to boost shareholder returns after several years of underperformance.

"An approach by Barclays is realistic in our view," analysts at Keefe, Bruyette & Woods said in a research note, estimating that Barclays could offer 31.3 euros per ABN share, and go higher if it sold off some units that did not fit its plans.

"We believe that an offer by Barclays is likely to trigger counter-offers by other international banks," KBW added.