NatWest strives for Warburg

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The Independent Online

Financial Editor

NatWest Group was making a frantic effort late last night to prise Warburg away from concluding its sale to Swiss Bank Corporation.

With the final details of SBC's takeover of Britain's leading investment bank almost complete, and an announcement expected either today or tomorrow, senior executives from NatWest, including Derek Wanless, the chief executive, and Martin Owen, the head of NatWest Markets, met yesterday evening with Sir David Scholey, Warburg's chief executive and chairman, in an attempt to trump the Swiss bank's play.

"SBC must still be better than evens to clinch this deal, but I would not write off NatWest," a source close to negotiations said. While NatWest has made it clear it is interested in buying the whole Warburg group, including Mercury Asset Management, the biggest stumbling block is the massive redundancies facing Warburg in the event of a British takeover.

Sources close to NatWest spoke of some 2,500 of Warburg's 4,500 jobs being at risk because of duplication between the two big London operations of the investment bank and NatWest Group. "To persuade people it is worth doing, NatWest is going to have to put up a lot of money," an insider said.

Senior NatWest executives were yesterday preparing for an "all-nighter" to go through the numbers of a takeover of Warburg. NatWest declared earlier this year its ambitions to strengthen its investment banking activities, which, despite improving in the past few years, remain weak in key areas. While comparatively strong in broking, NatWest is keen to bolster its corporate banking side.

NatWest bid unsuccessfully for Barings' corporate finance business, and now sees Warburg as an opportunity too good to let go, according to an insider. NatWest is being advised by N M Rothschild.

Top NatWest executives have in recent weeks had talks with Hugh Stevenson, chairman of Mercury Asset Management, to try to bring him on side in the event of a bid. The failed link-up in December between Warburg and Morgan Stanley underscored the importance of getting agreement from Warburg and MAM managements. "I think it is safe to say MAM is not against NatWest's intentions," a source said.

NatWest's negotiators have accepted at this late stage that money is the key factor in shifting Warburg's focus from SBC to the more difficult, and certainly bloodier, prospects of being absorbed by a leading British bank. "Warburg cannot afford a second failure after Morgan Stanley. It would rather have a deal with SBC than an auction. NatWest will have to be very firm," an insider said.