RBS to offer branch disposals to evade referral

THE ROYAL Bank of Scotland is preparing to offer a series of undertakings to the Office of Fair Trading on branch disposals and account transfers for small businesses in an effort to prevent its pounds 25bn bid for National Westminster Bank being referred to the Competition Commission.

The OFT earlier this week announced it was giving itself until 29 December to decide whether to recommend a reference. RBS's advisers believe that John Bridgeman, the director general of fair trading, asked for the 15 working-day extension in order to study more closely whether the density of the combined businesses raised competition concerns.

In the North-west of England, the two banks combined would have a high proportion of small and medium-sized business lending. However, this might be addressed through branch disposals and the transfer of this lending to another bank.

Stephen Byers, the Secretary of State for Trade and Industry, made reference to the fact that there were no overlapping branches between NatWest and Bank of Scotland in his statement giving Bank of Scotland clearance for its rival NatWest bid last Thursday.

NatWest is understood to have demanded more than pounds 17.50 a share from the Royal Bank of Scotland in talks last weekend as the price of board recommendation, way above RBS's initial pounds 15.60 a share offered, based on last Friday's RBS closing price of pounds 13.28. The precise terms demanded by NatWest's advisers were one RBS share and pounds 4.50 in cash for each NatWest share.

Terry Eccles of JP Morgan, adviser to NatWest, said that RBS shares would fall on Monday once the bid became public, devaluing a mainly share bid.

However, RBS's advisers, Merrill Lynch and Goldman Sachs were adamant that RBS's shares would rise on Monday. They were also hamstrung by the fact that the RBS was not authorised by its partners - BSCH, the Spanish banking giant, and CGU, the insurance group - to go much beyond the initial offer. On Monday RBS tabled a bid of 0.968 shares plus 305p in loan notes, only marginally above its starting point on Friday night of 0.95 shares and pounds 3.

NatWest's advisers were proved right. RBS shares have fallen by nearly 10 per cent while Bank of Scotland has risen - so its offer is now worth considerably more than RBS's.

Merger arbitrageurs and propriatory trading desks have decided to sell what they believe will be the eventual winner. "At some point this will inverse when people realise that with Bank of Scotland's offer worth more than pounds 1 more than RBS, there is a danger it might win," one trader said yesterday.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living