NatWest chief resigns
|
|
October 8, 1999: 8:12 a.m. ET
U.K. bank firms bid defense with CEO switch; investors cool on change
|
LONDON (CNNfn) - National Westminster Bank on Friday boosted its defense against the hostile 21 billion-pound ($36 billion) bid from Bank of Scotland with a management reshuffle that included the resignation of group chief executive Derek Wanless.
NatWest chairman David Rowland took on the CEO role and announced that the bank was considering all options, including asset sales to fight the bid.
However, the move received a cool response from analysts and investors, some of whom described it as "purely defensive" and "desperate."
"I'm not sure this is enough to turn the situation around," said Andrew Hobson, analyst at brokerage Capel, Cure & Sharp. "It's something that NatWest had to do to prove that they are serious in fending off this bid."
The bank has come under fire for its weak response to the takeover attempt by a rival less than half its size.
Analysts said the move was aimed at strengthening its hand, as Bank of Scotland's strategy is based on highlighting the deficiencies of NatWest management. The bank has underperformed the sector in recent years and failed to fulfill strategic objectives.
NatWest shares rose almost 1.5 percent Friday on the news, but later lost half of the gain in a weak London market. Bank of Scotland shares were a shade higher at 730 pence.
Rowland is expected to generate more confidence among investors than Wanless, whose track record is tarnished. "This means they are planning a defense and not a merger," said one London banking analyst who declined to be named.
Rowland is best known for turning around the ailing Lloyd's of London insurance operations from near-collapse. He served as Lloyd's' chairman between 1993 and 1997.
Lloyd's former chief executive, Ron Sandler, will join NatWest as chief operating officer in an attempt to beef up the defense team and persuade investors that the bank can remain independent.
But analysts said the team might not have enough firepower. "Sandler is a highly qualified individual, but I'm not so sure about his banking credentials, given that NatWest is up against [Bank of Scotland CEO] Peter Burt who is a banker through and through," said Capel's Hobson.
Rival suitors, including Royal Bank of Scotland (RBOS) and mortgage bank Abbey National (ANL), are also believed to be considering a counterbid for NatWest.
Rowland told Reuters that the decision had been made at a board meeting Wednesday evening.
"The board has been thinking about the leadership of the company and decided that in the present circumstances it was right and in the shareholders' interest to make a change," he said.
The move by NatWest comes a day after Bank of Scotland outlined more details of its bid, pledging to deliver around $1.6 billion in cost savings from the merged group within three years of completion.
The information received a muted reception from investors as NatWest had already pledged to deliver around $800 million in savings of its own.
On Monday, NatWest announced that it would to let its $17 billion bid for insurer Legal & General (LGEN) lapse.
Wanless, who joined NatWest in 1970, had served as chief executive since 1992. He has presided over the bank's disastrous efforts to turn itself into a true global bank -- moves that included a series of expensive investment banking acquisitions, most of which have since been reversed.
-- from staff and wire reports
|
|
|
|
|
|