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.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

John Palmer: 'Goldfinger' of British crime was murdered, say police

Murder of the Brink’s-MAT mastermind

'Goldfinger' of British crime's life ended in a blaze of bullets, say police
Forget little green men - aliens will look like humans, says Cambridge University evolution expert

Forget little green men

Leading evolutionary biologist says aliens will look like humans
The Real Stories of Migrant Britain: An Algerian scientist adjusts to life working in a kebab shop

The Real Stories of Migrant Britain

An Algerian scientist struggles to adjust to her new life working in a Scottish kebab shop
Bodyworlds museum: Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy

Dying dream of Doctor Death

Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy
UK heatwave: Temperature reaches 39.8 degrees on Central Line - the sweatiest place in London

39.8 degrees recorded on Tube

There's hot (London) and too damn hot (the Underground). Simon Usborne braved the Central line to discover what its passengers suffer
Kitchens go hi-tech: From robot chefs to recipe-shopping apps, computerised cooking is coming

Computerised cooking is coming

From apps that automatically make shopping lists from your recipe books to smart ovens and robot chefs, Kevin Maney rounds up innovations to make your mouth water
Jessie Cave interview: The Harry Potter star has published a feminist collection of cartoons

Jessie Cave's feminist cartoons

The Harry Potter star tells Alice Jones how a one-night stand changed her life
Football Beyond Borders: Even the most distruptive pupils score at homework club

Education: Football Beyond Borders

Add football to an after-school homework club, and even the naughtiest boys can score
10 best barbecue books

Fire up the barbie: 10 best barbecue books

We've got Bibles to get you grilling and smoking like a true south American pro
Wimbledon 2015: Nick Bollettieri - Junk balls and chop and slice are only way 5ft 1in Kurumi Nara can live with Petra Kvitova’s power

Nick Bollettieri's Wimbledon Files

Junk balls and chop and slice are only way 5ft 1in Kurumi Nara can live with Petra Kvitova’s power
Ron Dennis exclusive: ‘This is one of the best McLaren teams ever – we are going to do it’

‘This is one of the best McLaren teams ever – we are going to do it’

Ron Dennis shrugs off a poor start to the season in an exclusive interview, and says the glory days will come back
Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most