Rival Banks Raise Bids in Battle for Control of National Westminster Bank

The battle for National Westminster Bank (NatWest) has reached its final stages as two rival banks, Royal Bank of Scotland (RBS) and Bank of Scotland (BoS), have increased their bids. RBS raised its offer by £1.25 billion, while BoS increased its offer by £933 million. The offers are part of a heated competition for control of NatWest, with institutional investors set to decide early next week whether to back one of the two Scottish banks or stick with NatWest's own management.

Key Takeaways:

• RBS increased its offer by £1.25 billion, raising the cash element from £3.05 to £4.00 and keeping the equity component flat at 0.968 of its own shares for each NatWest.
• BoS increased its offer by £933 million, raising the cash element from 190p to 246p and offering 1.75 of its own shares and a special stock unit worth £1.10 for each share.
• Both banks have secured financing for their increased offers, with RBS drawing on its ally CGU and BoS underwriting its offer with Morgan Stanley and Credit Suisse First Boston.
• Most institutional investors are expected to decide early next week whether to back one of the two Scottish banks or stick with NatWest's own management.
• A bidder must gain the backing of 51 per cent of NatWest's shares to win, with NatWest potentially escaping even if a majority of its shareholders turn against it.
• RBS's chairman Viscount Younger said the decision is a "moment of truth" for shareholders, while BoS's chief executive Peter Burt expected a "cascade effect" with institutions making it clear which offer they prefer.

Statistics:

• RBS's increased offer values £22.8 billion, excluding its additional value shares.
• BoS's increased offer values £24.1bn.
• NatWest's share price fell 6.9 per cent to £11.88.
• RBS's share price slipped 5.5 per cent to £10.02.

Sources:

• The Financial Times, February no date provided
• The Scotsman, February no date provided