National Westminster Bank refused to concede defeat publicly yesterday, but Royal Bank of Scotland (RBS) continued to gain support from shareholders for its £21 billion sterling (€34.2 billion) bid and is now assured of winning a clear majority of NatWest's shares.
The combined RBS/NatWest will be Europe's seventh-largest bank by market value and the third-largest in Britain, behind HSBC and Lloyds TSB.
Bank of Scotland admitted in a memo to staff that its bid for NatWest had failed.
The outcome will be a disappointment to Irish financial institutions such as Irish Life & Permanent, Bank of Ireland and AIB, which had lodged bids for Ulster Bank.
In its offer document for NatWest, Royal Bank of Scotland said it would retain Ulster Bank if its bid was accepted. "On the basis of published information, RBS believes that the shareholders of the enlarged group would benefit from the retention of Ulster Bank" it stated.
Ulster Bank would not comment on the matter last night.
Phillips & Drew, the largest shareholder to have backed Bank of Scotland publicly, yesterday switched sides to ensure NatWest did not remain independent.
Other smaller investors also switched to RBS, giving it the backing of shareholders representing at least 50 per cent of NatWest shares. But fund managers acknowledged there was still a technical possibility that custodians could take so long to process revised orders that RBS might fail to clear the barrier by Monday's deadline. NatWest had indicated that a statement was likely yesterday, but its own advisers seem divided.
