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Commercial banks

NatWest Fights for Survival Amid Bank of Scotland's Unsolicited Bid

Strategic Insights

— 1 min read

NatWest's high-stakes battle to fend off Bank of Scotland's £22bn hostile takeover bid has reached a critical point, with the London-based bank racing to find a solution to its predicament. The undeclared bid, which Bank of Scotland's chief executive Peter Burt aims to convince NatWest's major shareholders is a fair £12.50-a-share offer, has been met with skepticism. Shares have surged nearly 30% to £13.54, suggesting that investors expect a counter-bid or a white knight to emerge and top the offer, potentially as high as £16.

Key Takeaways:

  • NatWest has appointed Dresdner Kleinwort Benson as its adviser, bolstering its defence team against Bank of Scotland's bid.
  • Royal Bank of Scotland has appointed Goldman Sachs as its adviser and is believed to be considering a possible deal with NatWest.
  • Senior bankers believe that unless NatWest can find a white knight, its only strategy is to turn predator on its attacker and make a £22bn bid for Bank of Scotland, which would be a risky option.
  • NatWest's major shareholders face a charm offensive from Bank of Scotland's chief executive Peter Burt, who is expected to argue that his £12.50-a-share offer is high enough.
  • Investors are holding out for a higher offer, with some expecting a counter-bid or a white knight to emerge.
  • The bid is expected to have major repercussions for the financial sector, with the government likely to reinforce its tough stance on competition and pricing.

Statistics:

  • NatWest shares surged 30% to £13.54 on Friday.
  • Bank of Scotland's bid is worth £22bn.
  • The bid is expected to prompt other deals in the sector.
  • Royal Bank's chief executive Sir George Mathewson cut short his trip to London to pursue his ambition to buy NatWest.
  • Goldman Sachs has been appointed as Royal Bank's adviser.

Sources:

  • The article cites no specific sources other than industry sources and unnamed institutional shareholders. However, the article references the following quotes and names:

- "unsolicited, unwelcome and ill thought out" - NatWest's description of Bank of Scotland's bid.

- Peter Burt, chief executive of Bank of Scotland.

- Sir George Mathewson, chief executive of Royal Bank of Scotland.

- David Prosser, chief executive of Legal & General.

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