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BANK'S pounds 21bn DAWN RAID ON ENGLISH RIVAL; Cheeky bid for NatWest.

THE Bank of Scotland yesterday launched a spectacular dawn ambush to take over English rival NatWest.

The pounds 21billion hostile bid shocked bosses at NatWest, which is more than twice as big as the Scottish bank.

And the City was left relishing the prospect of a titanic struggle between the pair.

Share prices soared amid forecasts of a flurry of takeover and merger activity which could ultimately change the face of British banking.

But unions warned of thousands of jobs losses if the deal goes ahead and the bank swallows up NatWest's massive network of English branches .

The Bank of Scotland has 22,700 staff and 325 branches, 25 of them in England, mostly in and around London.

By contrast, NatWest has 51,100 staff and 1719 branches, with five of them in Scotland in Glasgow, Edinburgh, Aberdeen, Dundee and Ayr. It also has a corporate banking centre in Edinburgh.

Staff in England would undoubtedly be hit but staff in Scotland would emerge largely unscathed if the Bank of Scotland's audacious move succeeds in making it Britain's third biggest bank.

There is very little overlap in the branch network of both banks, but the Bank of Scotland says there is room for big savings in the back office administrative processing centres at NatWest.

And the bank would also off-load NatWest's other businesses, including Ulster Bank, leaving only the rump traditional banking service.

Union leaders with finance union UNIFI said they feared this would cause "significant job losses" among the staff .

Union spokesman Di Davies said: "This is bad news for our members.

"We are unhappy that the Bank of Scotland is going to asset strip NatWest by selling off big chunks of the business.

"We are also questioning the capability of management at Bank of Scotland."

The union also accused the Edinburgh-based bank of using the deal to disguise long-term damage caused by its recent disastrous dealings with right-wing American TV evangelist Pat Robertson.

The bank finally abandoned a proposed tie-up with Robertson and made a grovelling apology after a massive public outcry over Robertson's pronouncements on gays, Moslems and ethnic minorities.

The Bank of Scotland launched its bid at 7.30am yesterday, giving NatWest just a few minutes notice.

It said the deal could only go ahead if NatWest abandoned its own pounds 10billion take-over bid for investment giant Legal and General.

And Bank of Scotland governor Sir John Shaw delivered a stinging indictment of the way NatWest is run.

Appealing to NatWest shareholders to dump the Legal & General deal, he said: "NatWest has a history of under-performance."

By 11am NatWest issued a curt, one-line statement rejecting the bank's offer as too low.

But now other inter-national banks have scented blood and are preparing for a bidding war with the Bank of Scotland.

The Bank of Scotland offer values NatWest at pounds 12.50 a share. But the City responded by sending NatWest's share price soaring by pounds 3.08 to pounds 13.54 - a sign that they believe the Bank's bid is too low.

Legal & General shares tumbled 14p to 179p as the offer threatened to scupper its deal with NatWest.

Professor Pradeep Yadav, an expert in mergers at the University of Strathclyde, said: "For the Bank of Scotland a merger makes sense.

"It lacks the size and the gravitas on the larger stage outside Scotland which the NatWest clearly has.

"If the move succeeds it will be brilliant and as a Scot I would support that."

But he warned that the Bank would have to up its offer to stand a better chance of success - and prepare for rivals to spark a bidding war.

Justin Urquhart Stewart at Barclays Stockbrokers said: "This raises the Bank of Scotland's capital value and shows they are not sitting back and waiting to be taken over.

"But at pounds 12.50 I think they have less than a five per cent chance of winning. The offer would have to be pounds 15 or pounds 16."

FACTS AND FIGURES

BANK OF SCOTLAND

Total branches

325

No. in Scotland

300

Total staff

22,700

Profits last full year

1bn

Market value

pounds 8.6bn

NATWEST

Total branches

1719

No. in Scotland

5

Total staff

51,100

Profits last full year

pounds 2.1 bn

Market value

pounds 17.0bn
COPYRIGHT 1999 Scottish Daily Record & Sunday
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1999 Gale, Cengage Learning. All rights reserved.

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Author:Macaskill, Jamie
Publication:Daily Record (Glasgow, Scotland)
Date:Sep 25, 1999
Words:716
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