Sign in Subscribe
Scotland

Bank of Scotland's Raised Offer Sets Stage for Competition in British Banking

Strategic Insights

— 1 min read

A successful bid for NatWest would propel the Bank of Scotland into a more prominent position in British banking, according to an Edinburgh-based analyst. As markets await the outcome of the increased offer, Scottish banking is poised for significant growth. If the Royal Bank declines to bid for NatWest, it could consider a merger with Barclays, potentially creating a banking group of similar size to a Bank of Scotland-NatWest link-up.

Key Takeaways:

  • The Bank of Scotland's raised offer sets the stage for competition in British banking, with the Royal Bank waiting for clearance from the Department of Trade and Industry (DTI) to make a bid.
  • Ian Lockhart, associate director of Tilney Investment, hailed the Bank of Scotland's raised offer as the start of the real competition for NatWest, which could flush out other competitive bidders.
  • The Bank of Scotland has until December 4 to make any further increase in its offer, with the Office of Fair Trading (OFT) to rule on whether a Royal Bank bid would raise competition concerns.
  • A Royal Bank-Barclays merger would create a banking group of similar size to a Bank of Scotland-NatWest link-up, potentially creating a major UK banking institution.
  • The raised offer makes it more likely than ever that NatWest will be taken over, with market professionals unconvinced by NatWest's arguments against the bid.
  • Abbey National has been mentioned as another possible bidder, but has stated it is not interested, similar to Walmart's previous interest in Asda.

Statistics:

  • The Bank of Scotland's raised offer has increased the stakes for NatWest, with expectations that it will go ahead.
  • The Bank of Scotland has until December 18 to complete its bid, with the final deadline for the existing bid.
  • If the Royal makes a competing bid, a new 60-day timeframe will start, with the City Takeover Panel having set December 8 as the date for the Royal to clarify its intentions.

Sources:

  • IAN LOCKHART, Associate Director, Tilney Investment
  • MONICA LANGA, Fund Manager, Singer Friedlander
  • "Bank of Scotland's raised bid for NatWest sets stage for competition," The Scotsman
  • "Royal Bank's chances of NatWest bid 'now or never'," The Herald Scotland
  • "Abbey National not interested in bid for NatWest," Financial Times (then The Financial Times Limited)

Read more