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Audio
Adrian Graves of the national association of bank customers
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The BBC's Rory Cellan-Jones reports; "Today the Scots struck back"
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The BBC's Greg Wood: "NatWest's days of independence are numbered"
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The BBC's Rory Cellan-Jones: "An audacious takeover bid from Edinburgh"
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The BBC's Rory Cellan-Jones reoprts: "An audacious takeover from Edinburgh"
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Ed Sweeny of the banking union Unifi: "We think that will be a mistake"
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Damiam Grammaticas: "This deal would change the shape of high street banking"
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Friday, 24 September, 1999, 22:23 GMT
NatWest fights 21bn takeover




NatWest Bank says it will fight a 20.8bn hostile bid from its much smaller rival, the Bank of Scotland.

Battle for Natwest
NatWest, the UK's third biggest bank, said it did not feel the offer reflected its true value. In a statement, it said the bid was "unsolicited, unwelcome and ill thought-out."

"We are determined to stop the Bank of Scotland aquiring the NatWest group on the cheap," it added.

If successful, it would be the largest ever UK takeover, but unions and bank customer groups say they fear it will lead to job losses and branch closures.

The Bank of Scotland (BoS) said NatWest would remain a separate unit, retaining its name.

But it would reduce by 50% in the combined group's 2050 branches - made up of 1,730 NatWest and 320 Bank of Scotland branches.

Ed Sweeny, of banking union Unifi, said he feared this would mean branch closures and job losses running into "thousands, not hundreds".

BoS said it would not put a figure on how many jobs may be cut, but there would be no large scale redundancies among its 64,500 staff.

There would be job losses, the bank said, but "not tens of thousands".

It said jobs would be largely cut through "natural wastage" and a recruitment freeze would be implemented from day one.

Adrian Graves, of the Association of Bank Customers, said the takeover was designed for the benefit of shareholders, not people who used the banks.

He said it would inevitably lead to cuts in the branch network.



Shares rocket

Shares in NatWest leapt 282p on the announcement, climbing to 13.28 - well over Bank of Scotland's offer price of 12.50, eventually ending the day at 13.50, a gain of more than 30%.



Bank of Scotland shares also climbed by nearly 50p to 750p.

The offer would be conditional on NatWest's proposed takeover of Legal and General not proceeding.

It will be made on the basis of 1.6 new Bank of Scotland shares and 1.20 of loan notes for each NatWest share.

Following the offer, NatWest shareholders will hold approximately 68% of the merged bank.

Banks to be sold

BoS said it would sell off non-core NatWest businesses.

These are expected to include Gartmore, Ulster Bank and Greenwich NatWest.

Sir John Shaw, governor of Bank of Scotland, said the takeover would benefit NatWest, which he said had been underachieving.

Sir John said: "Bank of Scotland has been evaluating the benefits of a combination with NatWest for a considerable time and had initial discussions with NatWest last year.

"These discussions failed to produce agreement.

"NatWest, through its recent offer for Legal & General, appears to be pursuing the bancassurance model, untested in the UK.

"We continue to believe more value could be created for shareholders through a concerted effort to eliminate costs within the NatWest banking business.
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See also:
27 Sep 99 |  The Company File
Banking on size to compete
05 Sep 99 |  The Company File
Exchange investigates Legal & General share trades
05 Sep 99 |  The Company File
NatWest eyes Legal & General
24 Sep 99 |  The Company File
Q&A: NatWest takeover bid
27 Sep 99 |  The Company File
The UK's biggest takeovers
24 Sep 99 |  Scotland
Bold move by ambitious bank
24 Sep 99 |  The Company File
Timing of a takeover

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