Dismissing the pounds 22bn Royal Bank bid as "inadequate and risky", Sir David Rowland, the NatWest chairman, said he would look at any fresh proposals but doubted whether either could muster the resources for a convincing bid. He insisted that the bank, which had already rejected a pounds 25bn hostile bid from Bank of Scotland, had plans for developing the business, including a pounds 2bn share buyback and a 25 per cent increase in dividend for the 1999 year.
Sir David said: "The share prices of the Royal Bank of Scotland and the Bank of Scotland have recently fallen significantly. Their proposals also involve claimed merger benefits which are unrealistic based on precedent and a high risk of customer disruption and value loss."
The tone of yesterday's document and the fact that NatWest is now bracketing the Scottish banks together comes as a blow to the Royal Bank of Scotland. It had hoped the removal of the threat of a Competition Commission referral last week might pave the way to renewed talks on an agreed deal.
Viscount Younger, Royal Bank of Scotland chairman, is still hoping to pay a courtesy call on Sir David later this week.
Having rejected the hostile Bank of Scotland bid which sparked the battle for NatWest in September, Sir David was seen as initially more favourable to the Royal Bank of Scotland, which was seeking an agreed deal. However, since the Royal announced plans to bid last month, its share price has fallen 22 per cent, undermining the value of its NatWest bid.
Sir David said yesterday that the bank had focused its criticism up to now on the Bank of Scotland because that was the bid that was on the table. Now that the Royal Bank has finally published its offer document the bank was able to look closely at its proposals and respond to them, he said.Reuse content