NatWest slims down to repel bid from Bank of Scotland

National Westminster Bank is cutting a third of its head office and central staff and selling off four businesses as part of …

National Westminster Bank is cutting a third of its head office and central staff and selling off four businesses as part of its defence against the hostile £21.2 billion sterling bid from the Bank of Scotland.

Mr Ron Sandler, who came in as chief operating officer three weeks ago when NatWest ousted Mr Derek Wanless as chief executive, announced that 1,000 jobs would be eliminated by the end of the year by removing overlaps between the head office and business units.

The bank is also cutting 650 jobs from its corporate banking division, on top of the 10,000 it has said would be lost in retail banking.

"Please don't assume that the 10,000 jobs in retail is the end of the story there," Mr Sandler added.

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NatWest also said it would sell Ulster Bank, Greenwich NatWest, a debt capital markets business, Gartmore, the fund manager, and NatWest Equity Partners, a venture capital unit.

That leaves NatWest focused on retail, corporate and private banking. It will not sell its Coutts private bank, but plans to introduce an additional service under the NatWest brand for wealthier customers.

Ulster Bank may be floated separately, but the others are likely to be sold to trade buyers or management. NatWest said it would return more surplus capital to shareholders - more than £1.5 billion sterling even without the proceeds of disposals.

Sir David Rowland, chairman and chief executive, said he had received approaches for all four businesses, but no discussions with anyone who might rescue his bank from BoS. "We are not looking for a white knight," he said.

Investment bankers said NatWest had succeeded in landing some punches in its defence against BoS. That is expected to increase the probability that Royal Bank of Scotland, Bank of Scotland's Edinburgh rival, might enter with a higher bid.

RBS said it was still watching the situation closely.

The fading of hopes for an agreed deal with RBS contributed to a 35p fall in NatWest's share price to £13.74 sterling. That is still above the £12.70 sterling a share value of Bank of Scotland's bid, but yesterday saw the most marked narrowing of this discount since the bid was mounted.

Some analysts estimated the disposals could raise about £3.5 billion sterling. All except Equity Partners had been targeted by Bank of Scotland as businesses to be disposed of.