Bank of Scotland tries to force rival into NatWest bid

THE BANK of Scotland made a renewed appeal to the City Takeover Panel yesterday to force its rival Royal Bank of Scotland to make a formal bid for NatWest.

The appeal follows the publication in the weekend press of a draft letter left by one of the RBS advisers in a taxi from Sir George Mathewson, the RBS chief executive, to NatWest shareholders sketching the outline of a proposed takeover bid for the English clearing bank.

The letter takes a conciliatory tone, claiming that RBS could achieve significant cost savings without the massive redundancies required under BoS' plan. The letter also claims that there is no need for a radical sell-off of businesses and that NatWest's top management can remain intact.

RBS portrays its senior management as "builders of businesses" as opposed to "cost-cutters at BoS".

RBS has not contested the authenticity of the document. However, a source close to the bank insisted yesterday that the letter only reflected "one stage in our thinking and by no means the definitive stage."

The discovery of the letter has added to the frustration in the BoS camp about the refusal of the panel to force the issue. RBS is being treated as a potential bidder for NatWest by the panel and last week filed for merger clearance with the Office of Fair Trading, but has not so far been required to commit itself to bidding, let alone going public with the terms on which such an offer would be made.

The panel rejected an earlier appeal by BoS on the grounds that it could not be seen to act in a way that tipped the tactical balance in the contest although it did set 3 December as the deadline for RBS to clarify its position.