Bank of Scotland resists Abbey's offensive

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The Independent Online

Abbey National, the high street bank seeking to take over Bank of Scotland (BoS), has launched a charm offensive to try to convince the City that Ian Harley, Abbey's chief executive, should run any combined group.

Abbey National, the high street bank seeking to take over Bank of Scotland (BoS), has launched a charm offensive to try to convince the City that Ian Harley, Abbey's chief executive, should run any combined group.

The escalation of the public relations battle came as Lord Tugendhat, the Abbey chairman, phoned Sir Jack Shaw, BoS's governor, in a renewed attempt to arrange a meeting between Abbey and BoS executives on Abbey's terms.

While initially favourable to a meeting at chairman level, Sir Jack later decided that, in view of Abbey's megaphone diplomacy, the atmosphere was not fully conducive to constructive talks. In a brief statement, BoS said Sir Jack would be giving his response directly by letter and not through the media.

Mark Pain, Abbey's finance director, and Andrew Pople, head of retail, broke their self-imposed silence to give full backing to Mr Harley's claims that the City wanted a takeover by Abbey of BoS with him at the helm. Both men have been touted with varyingcredibility as replacements for Mr Harley, who has been criticised in the City for lacking vision.

Mr Pople said: "The City is looking for clarity and the way to deliver that clarity of management and strategy is through a takeover. It is our management team led by Ian Harley that is going to be running the implementation and that position has the full support of the board."

Mr Pain said: "Together with their skills in corporate and small business banking and our experience in retail and bancassurance, we can be a threat to the major commercial banks."

In an attempt to keep up the pressure on the Scottish bank, Abbey yesterday denied suggestions it had ruled out a hostile bid for BoS. However, bankers said yesterday that any attempt by Abbey to go hostile would be laughed out of court.

One analyst said: "The way they are going, Bank of Scotland just needs to sit tight. By the time this is finished Abbey is going to have to concede not just Harley but probably Tugendhat as well." Another said: "I am amazed Abbey has so badly misread its shareholders. They have not been talking to the ones I have been talking to. Yes, the City wants a premium - they want someone to pay a premium for Abbey, not Abbey to pay a premium for Bank of Scotland."

After the experience with National Westminster Bank, where BoS chief executive Peter Burt was outbid earlier this year by his arch-rival Sir George Mathewson at Royal Bank of Scotland, BoS will be loath to turn the tables on Abbey and go hostile. But that possibility was being openly discussed in City dining rooms yesterday. Analysts estimate BoS could take out at least £500m of costs by removing duplication.

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