Banco Santander lined up for role in Royal Bank's bid to woo NatWest

THE ROYAL Bank of Scotland is preparing to enlist the support of BSCH, the 36bn euro (pounds 23bn) Spanish banking giant, in a move which will dramatically increase its firepower as it prepares to launch a pounds 26bn white-knight bid for NatWest Group, the high street bank.

Senior executives at RBS, which yesterday began a charm offensive in an attempt to secure a board recommendation from Sir David Rowland, the NatWest chairman, believe that its 11-year relationship with BSCH, one of Europe's most profitable and best connected banks, could be the secret weapon that tips the scales radically in RBS's favour in its three-way battle for NatWest.

RBS's Scottish rival Bank of Scotland launched a hostile takeover bid for NatWest last week. But Bank of Scotland's hopes of flushing out a bid from RBS yesterday proved wildly optimistic. Bankers said that while Sir George Mathewson, the RBS chief executive will have been spitting blood when he learnt of BoS's move on Friday, he will want to avoid being bounced into a premature countermove. They believe a formal offer from RBS for NatWest could be at least 10 days away.

Sir George who yesterday returned to Edinburgh after nearly two days of talks in London with his advisers, Merrill Lynch and Goldman Sachs, is understood to be seeking a meeting with Sir David Rowland later this week in an attempt to persuade him of the merits of an agreed deal with RBS.

As well as being able to offer a higher price, because of the increased scope RBS has for cost savings, the bank hopes to distinguish itself from its Scots rival by a more conciliatory approach.

In contrast to Peter Burt, the BoS chief executive who was scathing about the track-record of the NatWest management when he launched his hostile bid, Sir George is seeking to convince NatWest that he has high regard for its management and is prepared to offer some of the top jobs in the combined group to NatWest staff.

RBS is up against the clear preference of Sir David for HSBC, although it is far from clear than the bank would want to take NatWest unless its management were given a free hand.

RBS also wants time to consult further with BSCH, the former Banco Santander, which holds 9.98 per cent of the Scottish bank and would almost certainly underwrite a share of any takeover bid. Its chairman Emilio Botin and deputy chief executive Juan Inciarte sit on the RBS board and they have been fully appraised of RBS's takeover plans.

The Spanish group has been seeking to forge a pan-European banking alliance with Societe Generale, the French bank that last month evaded the clutches of its domestic rival Banque Nationale de Paris after a gruelling contest. Analysts suggested yesterday that there could be a role for SocGen too in an RBS bid for NatWest.

With a sizeable branch network and commercial lending business in England, RBS has enough of an overlap with NatWest to be able to justify a higher price for it than BoS because of the cost savings it could offer. However, the overlap in the small business market would not be big enough to raise the competition problems that would be posed by a deal between NatWest and its preferred partner HSBC.

NatWest shares rose 9 per cent to 1476p, in anticipation of RBS having to offer at least pounds 15 a share to clinch a deal. Royal Bank of Scotland was up 9 per cent at 1391p, despite having been wrong-footed by the BoS bid. Bank of Scotland was up 6 per cent at 795.5p.

Analysts said there was a danger that these rises indicted the market was getting ahead of itself. "The problem with going for an agreed deal with NatWest is that you leave the existing management in place when what the market really wants is to get rid of them," one analyst commented.

Arts and Entertainment
Game Of Thrones
Uh-oh, winter is coming. Ouch, my eyes! Ygritte’s a goner. Lysa’s a goner. Tywin’s a goner. Look, a dragon
tvSpoiler warning: The British actor says viewers have 'not seen the last' of his character
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave long-running series
The Etihad Stadium, home of Manchester City
premier leaguePlus all the build-up to Man City vs Chelsea and Everton vs Palace
people'I hated him during those times'
Britain's shadow chancellor Ed Balls (L) challenges reporter Rob Merrick for the ball during the Labour Party versus the media soccer match,
peopleReporter left bleeding after tackle from shadow Chancellor in annual political football match
Dame Vivienne Westwood has been raging pretty much all of her life
peopleFirst memoir extracts show she 'felt pressured' into going out with the Sex Pistols manager
Arts and Entertainment
Lauryn Hill performing at the O2 Brixton Academy last night
musicSinger was more than 90 minutes late
Lewis Hamilton in action during the Singapore Grand Prix
Formula OneNico Rosberg retires after 14 laps
ebooksAn unforgettable anthology of contemporary reportage
Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
Arts and Entertainment
tvReview: 'Time Heist' sees a darker side to Peter Capaldi's Doctor
peopleActress tells men: 'It's your issue too'
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam