Shares in National Westminster Bank in Britain surged yesterday in anticipation of a bidding war in the wake of last week's offer from Bank of Scotland.
The Takeover Panel formally listed Royal Bank of Scotland as a bidder after it issued a stock exchange statement confirming it had been "considering the position of the National Westminster Bank for some time and is watching the situation as it develops".
The expectation of a counterbid from Royal Bank pushed NatWest's shares up 9 per cent to £14.76 sterling, valuing the UK's second-largest bank at £24.6 billion sterling (€38.65 billion).
That is 6 per cent above the value of Bank of Scotland's bid, announced on Friday, even though a 6 per cent rise in the Edinburgh bank's own shares to 795 1/2p boosted the value of its offer, which comprises 1.6 shares and £1.20 sterling in loan notes for every NatWest share, to £23.2 billion sterling.
Analysts believe the cost savings available to either Bank of Scotland or Royal Bank justify a higher price. If other banks see this as their last chance to grab a sizeable foothold in the UK market, prices could spiral further.
