RBS to offer branch disposals to evade referral
Friday 03 December 1999
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.
- 1 Apple has installed security backdoors on 600m iPhones and iPads, claims security researcher
- 2 UK pirates will get four warning letters a year
- 4 Is Gideon Levy the most hated man in Israel or just the most heroic?
- 5 Israel-Gaza conflict: Deadly flechette shells 'used by Israeli military in Gaza Strip’
Malaysia Airlines flight MH17 crash: 'Nine Britons, 23 Americans and 80 children' feared dead after Boeing passenger jet is 'shot down' near Ukraine-Russia border
Malaysia Airlines MH17 crash: Vladimir Putin is given 'one last chance' to end hostilities in Ukraine
The 'scroungers’ fight back: The welfare claimants battling to alter stereotypes
The truth about conspiracy theories is that some require considering
Malaysia Airlines MH17 crash: Ukrainian military jet was flying close to passenger plane before it was shot down, says Russian officer
Malaysia Airlines MH17 crash: victims’ bodies bundled in black bags and loaded onto trains
iJobs Money & Business
£850 - £950 per day: Orgtel: Programme Director - Conduct Risk - Banking - £85...
£45000 - £50000 Per Annum + excellent benefits: Clearwater People Solutions Lt...
£250 - £300 per day + competitive: Orgtel: Finance Manager - Accountant - Bank...
£100000 - £120000 per annum + BONUS + BENEFITS: Harrington Starr: A leading fi...