Sign in Subscribe
Insurance industry

National Westminster Bank Takeover Battle Takes on European Perspective

Strategic Insights

— 2 min read

As the takeover battle for National Westminster Bank, one of the United Kingdom's largest clearing banks, intensifies, it has taken on a European perspective with two major insurers, CGU plc and Prudential Corp. plc, backing competing bidders. The immediate prize for the insurers is National Westminster Life, the bank's life insurance subsidiary, with CGU and Prudential offering different strategic partnerships and bid proposals.

CGU is partnering with Royal Bank of Scotland (RBS), taking half of the business, and agreeing to finance the bid by purchasing RBS common shares and preference shares. Prudential, on the other hand, is backing Bank of Scotland (BoS), planning to buy all of NatWest Life for approximately 900 million pounds, and gaining exclusive rights to sell insurance products through the combined retail networks of the life insurer and BoS.

Key Takeaways:

  • CGU is partnering with Royal Bank of Scotland (RBS) in the takeover bid, taking half of the business and agreeing to finance the bid by purchasing 300 million pounds of RBS common shares and as much as 900 million pounds of preference shares.
  • Prudential is backing Bank of Scotland (BoS), planning to buy all of NatWest Life for approximately 900 million pounds, and gaining exclusive rights to sell insurance products through the combined retail networks of the life insurer and BoS.
  • CGU already owns half of RBS's life business, Royal Scottish Assurance, which it bought last November.
  • Prudential, NatWest's largest shareholder with a 4.8% stake, insists its agreement to buy NatWest life won't affect the voting of its fund management arm, Prudential Portfolio Managers.
  • Trevor Petch, insurance research manager at Robert Fleming Securities, says CGU has the most to gain from an insurance perspective and notes that a successful RBS bid would increase the opportunity for CGU to become the bancassurance partner of an emerging pan-European banking union.
  • The takeover battle for NatWest has drawn in several European banks, including Banco Santander Central Hispano, which has offered to buy 1.2 billion pounds worth of RBS shares and fund a partial cash alternative to the RBS offer.

Statistics:

  • CGU will spend 300 million pounds on RBS common shares and up to 900 million pounds on preference shares.
  • NatWest Life is valued at approximately 900 million pounds.
  • Prudential currently owns 4.8% of NatWest shares.
  • Banco Santander Central Hispano has offered to buy 1.2 billion pounds worth of RBS shares.
  • The proposed pan-European banking union, including RBS, SocGen, and Banco Santander Central Hispano, could become a major player in the European banking market.

Sources:

  • "Takeover Battle for NatWest Takes on European Perspective" by Adrian Leonard, London correspondent, A. M. Best Company, Inc.
  • "LONDON, Feb 01, 2000, The takeover battle for National Westminster Bank, one of the United Kingdom's largest clearing banks..." COMTEX (http://www.comtexnews.com)

Read more