RBS cool on joining bid battle for Abbey

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The Independent Online

Sir Fred Goodwin, the chief executive of Royal Bank of Scotland, Britain's second-biggest bank, yesterday dismissed a takeover of Abbey National as a "mercy killing" which was probably not worth RBS's time.

Sir Fred Goodwin, the chief executive of Royal Bank of Scotland, Britain's second-biggest bank, yesterday dismissed a takeover of Abbey National as a "mercy killing" which was probably not worth RBS's time.

Sir Fred was announcing RBS's half-year profits, which rose 12 per cent to £3.85bn before tax, goodwill and integration costs. This was in line with expectations and was accompanied by an interim dividend of 16.8p a share, up 15 per cent.

RBS has admitted in the past that it would like to buy Abbey but fears the deal would be blocked by Britain's competition authorities. "We were clear in our position in the past, and our cards are on the table face up," said Sir Fred, adding that large acquisitions were off the bank's agenda while it was completing its $10.5bn (£5.8bn) takeover of Charter One Financial in the US.

RBS has a 2.83 per cent stake in Banco Santander, the Spanish bank which has made an agreed £8.2bn offer for Abbey National, and RBS and Santander have directors on one another's boards. Sir Fred said yesterday that the Spaniards may find it difficult to stay on the RBS board when it is discussing strategies in respect of the UK retail banking market, where Abbey is a rival.

Sir George Mathewson, RBS's chairman, who became a Santander director in 2001, did not attend the board meeting at which Santander decided on its bid for Abbey last week. Santander executives have not attended any RBS meetings since the bid. "We are extremely aware of our responsibilities as directors and we would not participate in discussions where we felt there was the possibility of a conflict of interest," Sir George said.

The Abbey speculation overshadowed RBS's results, which left its shares 59.5p lower at £14.99. Its non-banking operations, which include Direct Line, Churchill and Privilege Insurance, account for 60 per cent of revenues, which rose by a fifth to £10.9bn. Banking revenues were squeezed by greater competition in the UK retail market and a move towards mortgages.

RBS also announced yesterday that it has agreed to buy Lynk Systems, a US credit card merchant acquisition business, for $525m to add to its Citizens Financial commercial bank in the US.

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