Edinburgh's Banking Community Divided: A Battle for NatWest

The recent bid by Royal Bank of Scotland (RBS) for National Westminster has sparked a public feud between the two Edinburgh-based clearing banks, with their respective chief executives trading insults and criticisms. The tensions between RBS and Bank of Scotland (BoS) have cooled the normally good relations between the two banks, and have raised concerns about the vulnerability of the losing bank to takeover. The outcome of the bid is crucial not only for the banks involved but also for the status of Edinburgh as a financial center.

Key Takeaways:

• The public feud between RBS and BoS has raised concerns about the vulnerability of the losing bank to takeover, with one financial analyst predicting that the loser will be left with a "credibility problem, and possibly face a takeover by someone else."
• The two banks have historically enjoyed good relations, with minimal poaching of staff and a joint venture to fund large MBOs. However, the tensions unleashed by the bids have cooled these relations.
• A successful outcome for either RBS or BoS is expected to raise Edinburgh's status as a financial center, with the head office of NatWest likely to be moved to the city, bringing substantial benefits to the financial community.
• One of the Edinburgh-based banks will emerge victorious, while the other will be vulnerable to takeover, sparking fears about the impact on the regional economy.
• The Scottish parliament may hold up the takeover proceedings, but would not have the power to block it, due to the regulation of companies and financial institutions being a reserved power.

Statistics:

• 2 Edinburgh-based clearing banks, RBS and BoS, are vying for NatWest in a bid that has sparked a public feud.
• 58 is the age of Gavin Masterton, the BoS nominee to lead NatWest, while Fred Goodwin, RBS's nominee, is 41.
• 1 of the 2 Edinburgh-based banks is expected to emerge victorious, while the other will be vulnerable to takeover.
• 10-20 years is the timeframe over which the two banks have cut their costs to make themselves attractive to potential acquirers.
• £ billion is the value of the shares of the Scottish banks, which have been highly rated and are seen as unlikely to be vulnerable to takeover.
• 1 Scottish bank is expected to become a lot bigger after winning the NatWest bid, while the loser will face a credibility problem and potentially be vulnerable to takeover.

Sources:

• "The Scotsman"
• "Edinburgh Financial Analyst"
• "Edinburgh Stockbroker"
• Ray Perman, Chief Executive of Scottish Financial Enterprise
• A senior banker with another Scottish bank