NatWest in race to seal L&G deal

Pressure mounts on bank to close pounds 10.7bn deal

IN THE face of a Stock Ex-change inquiry into how news about the deal broke prematurely on Thursday, National Westminster Bank was racing yesterday to put the final touches on its agreed pounds 10.7bn bid for Legal & General.

The City has generally hailed the logic of a tie-up between Britain's third largest bank and fourth largest insurer. But tensions over who will run the combined business - and the possibility of a rival bidder surfacing - have put NatWest under pressure to get the deal done fast. "It all makes sense," said Thomas Rayner, an analyst at SG Securities. "But if it isn't done in the next few days, anything could happen. It could all fall apart."

The market hedged its bets on Friday. While L&G shares jumped 9 per cent to 205.25p, NatWest shares tailed off 68p to 1,143p. "The price NatWest is offering L&G is a very full one," said Mr Rayner. "If a rival bid came in, I'm not sure they could go much higher."

The boards of NatWest and L&G each met over the weekend to review the proposed link-up. Smoke signals coming out of both camps suggested an announcement could come as early as tomorrow.

If the deal does go ahead, NatWest chairman David Rowland and chief executive Derek Wanless are expected to retain their jobs. L&G chief executive David Prosser is expected to assume command of the bankassurance group's UK retail operations.

"Prosser's position goes to the heart of the deal," said a person close to the talks. "Banks have not done particularly well in selling insurance products. This is because bankers have been in charge of insurance products that have not been that well designed. Under David Prosser you'll see assurance-led retail banking. You'll see new products. All this could create a great deal of value."

City analysts endorsed Mr Prosser's prowess. "L&G has an excellent record in recent years in terms of sales growth," said Chris Rathbone, an analyst at Williams de Broe. "They've done well on the investment management side and they have a multiple and good distribution strategy."

The City also approves of Mr Rowland, the suave, steely insurance broker who resuscitated Lloyd's of London after billions of pounds of reinsurance losses in the early 1990s.

Analysts note that Mr Wanless has long wanted to pull off a signature deal as NatWest chief executive, and after the sell-off of most of NatWest's investment bank two years ago will be particularly keen to make things work.

According to experts forecasting the consolidation of the European financial sector, the deal was not supposed to happen. A year ago they were looking for cross-border mergers between banks. They have also looked for a merger between NatWest and Barclays, until the consensus grew that the Government would not allow it on competition grounds.

The same experts raise the possibility, as one put it, of "the A's" - German insurer Allianz, French insurer Axa, or Dutch insurer Aegon - making a counterbid.

But people close to the talks judge this unlikely because a foreign bidder would likely have to mount an all-cash bid to win over City institutions. NatWest is expected to make a cash and stock offer. The bank is expected to raise between pounds 3.5bn and pounds 4bn by selling bonds and launching a rights issue to cover the cash portion of the bid.

Talks between NatWest and L&G were initiated four weeks ago by Mr Rowland, according to people close to the deal.

Start your day with The Independent, sign up for daily news emails
News
peoplePair enliven the Emirates bore-draw
Arts and Entertainment
tvPoldark episode 8, review
News
Britain's opposition Labour Party leader Ed Miliband (R) and Boris Johnson, mayor of London, talk on the Andrew Marr show in London April 26
General electionAndrew Marr forced to intervene as Boris and Miliband clash on TV
News
news
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
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

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Day In a Page

General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions