Natwest battle reopens as Byers gives green light to £23bn RBS bid

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The Independent Online

The stalled battle for National Westminster Bank spluttered back to life yesterday after Stephen Byers, the Trade and Industry secretary gave the green light to the Royal Bank of Scotland's £23bn bid for the English high street bank.

The stalled battle for National Westminster Bank spluttered back to life yesterday after Stephen Byers, the Trade and Industry secretary gave the green light to the Royal Bank of Scotland's £23bn bid for the English high street bank.

The move kills off lingering hopes in the Bank of Scotland camp that its Scots rival might be blocked from bidding and NatWest be delivered into its hands by default. NatWest now faces the prospect of having to fight on two fronts against the two Scottish bidders until Valentine's Day next year.

Within hours of receiving clearance, the Royal Bank of Scotland sprang into action and posted its offer document to NatWest shareholders.

The only new information it includes is the cost of the bid - £240m of which £93m is fees to the bank's advisers. That is against £187.5m for the Bank of Scotland of which £82.5m is advisory fees.

Sir George Mathewson, the Royal Bank chief executive said: "RBS has the breadth and depth of management to make this work. This transaction is about business creation not business destruction."

The sending of the document restarts the clock on the 60-day bid timetable, although with most institutional fund managers clearing their desks for the holiday, hostilities are unlikely to resume until early New Year when RBS hopes to launch a final round of lobbying to seek support of NatWest's institutional shareholder base.

Mr Byers said he was acting on advice from the Office of Fair Trading that the bid did not raise competition concerns. "The parties face significant competition from other institutions over a range of services and I do not believe the merger would give them a significant increase in the market power that would merit a referral."

There had been fears in the RBS camp that the overlap between NatWest and Royal Bank of Scotland branch network in the Greater Manchester area might have provided grounds for a referral.

RBS which has seen its share price fall by 15 per cent since announcing its intention to bid for NatWest is hoping to take advantage of the Christmas break to regroup. As of last night with RBS shares having risen 2p to £11.13 on the day, its mainly paper offer in headline terms was worth £1.51 less a share than Bank of Scotland's offer, although it was still marginally higher than NatWest's shares. These rose 46p to £13.56 after news of the clearance came through.

The Bank of Scotland said the clearance will now allow both offers for NatWest to be judged on an objective basis, adding:"We have the higher price, better track record and stronger management team."

The City believes RBS is still favourite to win NatWest , although the lack of obvious enthusiasm for its plans has knocked confidence in its camp, and the prospect of NatWest going to Bank of Scotland or even escaping altogether is no longer seen as ridiculous as it was when Bank of Scotland launched its bid nearly three months ago.

Unless RBS' share price recovers sharply in the New Year, it is expected to have to draw more heavily on the resources of its partners BSCH, the Spanish bank and CGU, the British composite insurer to top up the cash element of its bid.

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