Royal Bank of Scotland Set to Outbid Bank of Scotland's Hostile Takeover Bid for NatWest

Strategic Insights -

A battle for control of National Westminster Bank is unfolding as Royal Bank of Scotland prepares to table a competing hostile offer to Bank of Scotland's bid. The move comes after weekend talks failed to secure an agreed bid from NatWest's board, with RBS's Sir George Mathewson expected to table an offer of at least $27 billion. This development is set to escalate a tense takeover battle between Scotland's two largest banks, with a potential takeover of NatWest by either RBS or Bank of Scotland likely to trigger further consolidation in the banking industry.

Key Takeaways:

  • Royal Bank of Scotland is set to outbid Bank of Scotland's hostile takeover bid for National Westminster Bank with a bid of at least $27 billion.
  • The move is expected to be tabled today, following weekend talks that failed to secure an agreed bid from NatWest's board.
  • The takeover battle is likely to focus on the quality of the top management of Bank of Scotland and Royal Bank of Scotland, with the two chief executives, Peter Burt and Sir George Mathewson, facing off in the bid.
  • A successful takeover of NatWest by either RBS or Bank of Scotland will put the "losing" party at risk of a takeover bid itself, according to many observers.
  • Sir Brian Pitman, head of Lloyds TSB, is watching the situation with interest, with analysts speculating that he may be eyeing a takeover of one of the Scottish banks.
  • Royal Bank of Scotland is expected to bring forward its annual results, due next Thursday, to reveal pre-tax profits of over $1 billion.
  • NatWest has outlined cost savings of $525 million by 2002, including the closure of 200 more branches, leading to 15,000 job losses overall.

Statistics:

  • $27 billion, the minimum bid value from Royal Bank of Scotland in its competing hostile takeover offer.
  • $26.3 billion, the lifted bid value from Bank of Scotland's aggressive offer for NatWest.
  • $525 million, the cost savings outlined by NatWest to be achieved by 2002, including the closure of 200 more branches.
  • 15,000, the total job losses expected by NatWest's restructuring plans.
  • 3,350, the additional job losses announced on top of the previously announced total.

Sources:

  • "UK Acquisition Watch" by a City adviser ( quote and information)
  • Sir David Rowland, Chairman and Chief Executive of NatWest ( quote and information)
  • Sir George Mathewson, Chief Executive of Royal Bank of Scotland (information and quote)
  • Gavin Masterton, Managing Director and Treasurer of Bank of Scotland (information and quote)
  • "Final Defence Document" by NatWest (information and statistics)