NatWest shares dip after it spurns DMG's global equities offer

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The Independent Online
National Westminster shares tumbled yesterday at news that it had spurned a bid from Deutsche Morgan Grenfell for parts of NatWest Markets. Pressure is mounting on the company to make a definitive statement on the future of its beleaguered investment banking arm reports Lea Paterson.

The bank announced yesterday that it had turned down an "unsolicited approach" from DMG, the investment banking arm of Frankfurt-based Deutsche Bank, for its global equities business.

"NatWest has decided that Deutsche Morgan Grenfell's proposal is not in the best interest of its shareholders or its employees", it said in a statement.

NatWest balked at the price offered by Deutsche Bank. According to one insider, Deutsche's offer was "far below" the pounds 300m price tag put on NatWest's equity business by some analysts.

"The reasons our discussions broke down were price and strategy," admitted Michael Philipp, head of DMG's global equity division, adding that DMG's bid was "certainly not above" pounds 300m.

"We are not changing our price. We are happy with our analysis," he said.

NatWest stressed yesterday that the bid was "unsolicited", yet discussions between the two parties have been taking place for some time.

Mr Philipp said: "We approached them [NatWest] informally four to six weeks ago, We entered formal discussions about two weeks ago." DMG is understood to have made a formal offer for the global equities division, part of embattled investment banking subsidiary NatWest Markets, on Thursday afternoon.

NatWest's share price fell as news broke that it had spurned DMG's offer. Shares closed at 857p, down 43p on the day.

Mark Hogey, analyst at Credit Suisse First Boston, said: "The City is disappointed that NatWest is perceived to be considering bids purely for its equity business."

Another analyst added: "A lot of people were looking for NatWest Markets to be sold as a stand-alone business."

Mr Philipp confirmed that, in contrast to its rival Barclays which owns the BZW investment bank, NatWest had been "willing to talk just about its global equity division". He said that DMG was not interested in buying BZW because Barclays was unwilling to sell only the equities business .

Pressure is growing on NatWest to follow the example set by Martin Taylor, chief executive of Barclays, and to make a definitive statement about NatWest Markets' future.

"They [NatWest] are going to have to do something decisive. The fact that they haven't makes senior management look directionless," said one analyst yesterday.