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Commercial banks

NatWest's Future Hangs in the Balance Amidst Battle for Control

Strategic Insights

— 1 min read

NatWest's management is caught in the midst of a contentious takeover battle, with Bank of Scotland's hostile bid for the 'big four' player likely to result in significant job losses. UNIFI, the finance union, has expressed concerns over the proposed acquisition, citing potential layoffs and potential consequences for NatWest's workforce. Meanwhile, NatWest's bid for Legal & General has lapsed due to Bank of Scotland's aggressive intervention, which has significantly altered the dynamics of the market.

Key Takeaways:

  • UNIFI estimates that a Bank of Scotland victory would lead to 15,000 job losses at NatWest, on top of the 10,000 posts already being cut by the English bank.
  • Bank of Scotland has estimated that about 5,000 of NatWest's 68,000-strong workforce will leave each year of their own accord.
  • NatWest's chief executive Derek Wanless has bowed out, and the union is aware that the bank may implement further job cuts if it pursues a go-it-alone strategy.
  • Bank of Scotland has predicted it could extract more than £1bn of annualised cost savings within three years of a takeover of NatWest.
  • UNIFI believes the publication of Bank of Scotland's full offer document will likely flush out rival bidders, potentially leading to a more favorable outcome for NatWest's employees.
  • Sir David Rowland, NatWest chairman, has appointed Ron Sandler as chief operating officer, and the pair are meeting institutional shareholders this week.
  • Lloyds TSB's chairman, Sir Brian Pitman, is reportedly taking a careful interest in the situation and may not allow Bank of Scotland's bid to succeed if no rival offer emerges.

Statistics:

  • 15,000 estimated job losses at NatWest if Bank of Scotland's bid is successful.
  • 68,000-strong workforce to be impacted by Bank of Scotland's takeover.
  • £1bn projected annualised cost savings by Bank of Scotland within three years of a takeover.
  • 5,000 NatWest employees expected to leave each year due to natural turnover.
  • 1.41% acceptance rate for shareholders in Legal & General by the first closing date.
  • £21.1bn valuation of NatWest by Bank of Scotland.
  • 1264p per share valuation of NatWest under Bank of Scotland's offer.
  • 6-month change in Bank of Scotland's shares – 5.5p to 715p.

Sources:

  • FINANCE union UNIFI
  • Bank of Scotland
  • NatWest
  • Lloyds TSB
  • The Scottish Financial News

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