The official explanation for raising the bid so early is that Bank of Scotland needs to give itself sufficient time to convene an egm to approve the takeover before it can close. Unfortunately, it also gives Royal Bank a specific target to aim at. It is always possible that Mr Burt still has ammunition left further to pump up his bid, but the adverse reaction of his share price yesterday would suggest powerfully that he does not. Bank of Scotland has probably gone about as far as it can, the City is saying.
For NatWest, it is no longer a question of whether the bank can remain independent, only one of what price it can finally extract. In the circumstances, Sir David Rowland and Ron Sandler have put up a creditable fight, but they never stood much chance of salvaging such a desperate situation. NatWest remains a highly profitable bank with a fine franchise and considerable potential, but the City long ago lost faith in the power of existing management to realise it. As evidence of change, the arrival of Sir David and Mr Sandler was simply too little, too late. The defensive and unwanted Legal and General bid, ill-conceived from the start, helped seal their fate.
Having been deprived of a reference to the Competition Commission, their only hope now of not falling to Bank of Scotland's axe is an agreed deal with the Royal. Sir George can probably afford to go a little higher, indeed he may believe he has to in order to avoid being marginalised by the powerhouse created by Bank of Scotland. His secret weapon is the ability to underwrite at marginal cost, thanks to the helping hand of Banco Santander, Royal Bank's Spanish partner. This ought to place a floor under his share price and prevent the value of the offer being undermined by market scepticism.
Sensing the possibility of defeat, Bank of Scotland is pushing hard to have Royal Bank's ambitions referred. Its representatives had hoped to be in at Number 10 yesterday to advance the case. The game has entered its last round.