Leading article: Consumers should welcome takeovers from global players

IT IS just as well that merger talks between the Royal Bank of Scotland and NatWest broke down. It is better for customers, shareholders and the wider economy that the RBS, a good, well-managed company, should make a "hostile" takeover bid for NatWest, a mediocre, neither-one-thing- nor-the-other kind of high-street bank.

Agreed mergers are good only for managers, which is why that between Carlton and United News & Media will probably be a disaster.

The RBS bid, on the other hand, promises the sort of electric shock treatment that is long overdue in personal and small-business banking. This is a sector that has been too slow to innovate and has a poor record of customer relations. Recent advances in telephone and Internet banking have left the three independent UK banks - NatWest, Barclays and Lloyds TSB - trailing in their wake.

The humble consumer is likely to be bemused by the sheer size of the RBS's pounds 27bn bid, and even more so by the record pounds 74bn bid by Vodafone for Mannesmann, the German phone company. The first reaction of the lay person is to think that such large numbers must signify something in the everyday matters of getting cash out of a machine or buying a mobile phone. But the second reaction, after scouring the newspapers for the "what it means to you" bullet points, is to shrug the shoulders and put it all down to the mysteries of high finance. That would be a mistake, however, because, although the benefits are indirect, hostile takeovers are the best way to ensure that consolidation in mature or maturing industries leads to greater efficiency.

It is not mindless British nationalism to deride the Germans' defensive response to the Mannesmann takeover - after all, Germans and Americans run our motor industry, the Bank Formerly Known As The Midland is now owned in Hong Kong and most of the rest of the City of London is American or Swiss.

So what if the English NatWest is run from Scotland - except that it recalls the glories of Scottish financial entrepreneurship from the 18th century onwards? The Germans are just plain wrong to want to create artificially national giants. All nations should instead welcome takeovers from globally competitive management teams, wherever they are based.