Barclays' battle for control of ABN Amro took a fresh twist last night after it emerged that an investigation by the US Justice Department into past money transfers at the Dutch bank presented a major obstacle to signing the deal.

Barclays' battle for control of ABN Amro took a fresh twist last night after it emerged that an investigation by the US Justice Department into past money transfers at the Dutch bank presented a major obstacle to signing the deal.

The Wall Street Journal reported that ABN is trying to reach a settlement with the Justice Department but is facing time pressure, while Barclays wants greater reassurance that the matter can be resolved before signing a deal to buy ABN within the next two weeks.

Barclays does not want to inherit the risk of a criminal investigation, sources close to the inquiry said.

The exact operations under investigation by the Justice Department are not clear, the Wall Street Journal said.

In a separate development, the Dutch central bank said it would not object in principle to a foreign company - possibly an alliance of Royal Bank of Scotland and Spanish banking group Santander - trying to buy ABN Amro, even if it planned to break it up and sell parts of the business.

Barclays, the UK banking group, has been in exclusive talks with ABN Amro about a tie-up for the past three weeks. Under terms of the proposed deal, Barclays would keep ABN Amro largely intact. However, Nout Wellink, president of the Dutch Central Bank, told the Financial Times that a restructuring would be "no problem whatsoever".

Banking industry analysts said last night that his comments may encourage other bidders, who are huddled on the sidelines, to come forward.

Royal Bank of Scotland has been cited as one potential bidder that might be able to pay a better price if it sold ABN Amro's Brazilian operations to another bank.

Barclays' talks with Amsterdam-based ABN Amro were prompted by calls for a break-up from activist investor the Children's Investment Fund.

At the time, Wellink told a Dutch newspaper that the break-up would be "a bridge too far" - a reference to the failed Allied attack to capture key Rhine River bridges in the Netherlands during the Second World War.

But the Dutch central bank chief appears to have changed his mind. In the interview with the FT, he offered an opinion on what would happen if a solid bank took over with a strategy to restructure underperforming ABN.

"Let them come to the supervisor, and we will look at it, and when it looks fine there will be no problem whatsoever," he said.

There was much speculation over the Easter weekend that Royal Bank of Scotland and Abbey owner Santander were co-operating on plans to thwart the proposed merger of Barclays and ABN Amro. One report suggested that under the potential transaction, Santander would take control of ABN's retail banking operations in continental Europe, while Royal Bank would acquire La Salle, ABN's US retail bank.

The proposed counter-bid would be delivered soon after an agreed deal between Barclays and ABN Amro, which is expected to come in the next 10 days. The board of Barclays is understood to be considering whether to offer Royal Bank the opportunity to buy La Salle on completion of its merger with ABN Amro, in an effort to remove the threat of a counterbid. Such a move would also take out some of the execution risks involved in any transaction.

A tie-up between Barclays and ABN Amro would create a banking and financial services group worth more than $175bn (about £89bn). As well as catapulting the British bank into the top five global banking league table, it moves it up a place to the second-biggest banking group in the UK, overtaking Royal Bank.

It has been reported that Barclays will be able to cut ABN Amro's costs by as much as £2bn, including through the overlap between the two businesses. A deal involving Royal Bank and Santander would renew a partnership between the two banks that was broken up after the Spanish bank bought Abbey in 2004.

Santander's support of Royal Bank is said to have been influential in Royal Bank's takeover of NatWest in 2000. La Salle is believed to be valued at around £5bn and would boost one of Royal Bank's key objectives to expand its US banking business. As well as continental Europe, Santander is believed to be keen to acquire ABN's Brazilian operation.

Failure by Barclays chief executive John Varley to complete the ABN takeover is likely to leave the company vulnerable to a takeover. Jamie Dimon, the chairman and chief executive of JP Morgan, is among those thought to be interested in such an acquisition.