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Banking industry

Birmingham Midshires Rejects Royal Bank's Bid, Confirms Halifax Offer

Strategic Insights

— 1 min read

The battle for Birmingham Midshires between Royal Bank and Halifax has taken a significant turn after the society's management announced it cannot recommend Royal Bank's $630 million bid to its members, citing concerns over its fairness and reasonableness. This move comes as the Building Societies Commission has blocked the Royal Bank's bid from proceeding without the recommendation of the Midshires board. The society's management is seeking permission from the Royal Bank to release it from its agreement not to discuss other offers, which would allow it to engage with Halifax's $780 million bid.

Key Takeaways:

  • The Birmingham Midshires board has rejected Royal Bank's $630 million bid, citing concerns over its fairness and reasonableness due to a near 50% increase in the price of retail banks since last August.
  • The Building Societies Commission has blocked the Royal Bank's bid from proceeding without the recommendation of the Midshires board.
  • The society's management is seeking permission from the Royal Bank to release it from its agreement not to discuss other offers, which would allow it to engage with Halifax's $780 million bid.
  • George Mathewson, Royal Bank's chief executive, has stated that the deal between the parties was "good for everyone involved" and that his company was "very disappointed" with the Midshires board's decision.
  • The Royal Bank has launched a $515.5 million bond issue, the first of its kind to pool existing asset-backed securities.
  • The bond issue includes collateral backed by assets such as credit card receivable and residential mortgages.

Statistics:

  • $630 million: the value of Royal Bank's bid for Birmingham Midshires.
  • $780 million: the value of Halifax's bid for Birmingham Midshires.
  • 50%: the increase in the price of retail banks since last August.
  • Over 1 million: the number of Birmingham Midshires members who were expected to vote on the transfer of ownership.
  • $515.5 million: the value of the Royal Bank's bond issue.

Sources:

  • "Birmingham Midshires rejects Royal Bank bid, Halifax offer in the frame" by Geoffrey Owen, The Times, April 24, 1990.
  • "Royal Bank accuses Birmingham Midshires of trying to scupper deal" by Geoffrey Owen, The Times, April 22, 1990.
  • "The deal that fell apart" by Geoffrey Owen, The Times, April 25, 1990.

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