NatWest joins ScotAm race

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The Independent Online
National Westminster Bank has emerged as a last-minute bidder for Scottish Amicable, the mutual life insurer. It has signed a confidentiality agreement to gain access to the information it needs to frame a bid, which must be submitted by Friday.

NatWest lines up alongside five other bidders that have signed confidentiality agreements - Fortis, GE Capital Abbey National, Prudential and Australian Mutual Provident.

NatWest has never denied its interest in Scottish Amicable but has always downplayed its involvement and suggested it is not a front runner.

However, by signing a confidentiality agreement it has given the clearest indication yet that it is prepared to pursue Scottish Amicable.

None of the companies that have signed agreements are committed to making a bid by Friday's deadline. However, with Abbey National and Prudential having publicly made offers for the mutual insurer, which prompted the auction now underway, it is thought that most of the potential bidders are embarked on something more substantial than a fishing expedition.

Firm offers must be made by Friday, after which all bidders will be at liberty to make their offers public.

That will make it difficult for NatWest to shed further light on its interest when it announces its final results for 1996 this week.

Derek Wanless the bank's chief executive, will announce on Tuesday pre- tax profits of pounds 1.1bn to pounds 1.25bn for last year. The headline figures will be down from the pounds 1.75bn it reported in 1995. The decline reflects the provisions in 1996 on the sale of Bancorp, its troubled US retail chain, but underlying performance remains strong.

The bank's interest in Scottish Amicable will focus even greater attention on what NatWest says about a share buy-back. Brokers believe the bank might yet launch a share buy-back of up to pounds 225m, although it may retain the money for expansion.

NatWest announced a pounds 450m buy-back programme last August, but the bank has always insisted that it is prepared to invest surplus capital in acquisitions providing it can see a higher return for investors in the long run.

Last week, high-street rival Barclays said it would return pounds 500m to shareholders this year.

The Scottish Amicable board and its advisers intend to make a recommendation by the end of next month on which bid they believe represents best value for policyholders.

Although bids have to be submitted by Friday, the open auction approach will allow contenders to make revisions to their offers until the middle of March, at which point bids will be deemed final.

Scottish Amicable believes this approach offers policyholders the best opportunity to maximise value.

The complexities of the business and the variety of funding techniques that can be used to frame a bid makes comparison of the offers difficult. The open auction process will allow Scottish Amicable to explain more clearly to its policyholders the reasons for its ultimate recommendation.