Great Britain/ India/ Hong Kong Bank Mergers & Acquisitions (Mercantile Bank)

Photo: A bill of exchange, a sort of promissory note for making payment, dating from 1859. This is one of the earliest surviving documents from the Chartered Mercantile Bank of India, London and China, which was known as the Mercantile Bank of Bombay between 1853 and 1857; the Chartered Mercantile Bank of India, London and China between 1857 and 1892; the Mercantile Bank of India between 1893 and 1957, and the Mercantile Bank Ltd. between 1958 and 1984.

Mercantile Bank Ltd.

The Mercantile Bank Ltd. had a very storied past full of ups and downs. It was once upon a time a local Indian bank, then it became a British bank, and eventually a Hong Kong bank in its final decades. The bank was founded in 1853 as the Mercantile Bank of Bombay as a trade finance bank. By 1857, the bank had opened offices in London, Madras (now Chennai), Colombo, Kandy, Calcutta (now Kolkata), Singapore, Hong Kong, Canton (now Guangzhou), and Shanghai.

In that same year of Mercantile Bank of Bombay’s founding, however, the establishment of a rival British overseas bank also with a focus on British India, China and the colonies in the Orient applied for and obtained a Royal Charter from Queen Victoria, and called itself the Chartered Bank of India, Australia and China (today’s Standard Chartered plc).

A Royal Charter used to be the only means to establish a public or private corporation, but by the mid-19^th century it certainly was not the sole process to do so. While a Royal Charter defines a corporation’s privileges and purposes such as those of a town or a city, the granting of such by the Victorian era no longer indicated, for example, Royal patronage, nor implied or express state guarantee in times of troubles. Even though a Royal Charter is technically granted only to a body or business which can demonstrate pre-eminence and stability, constitutionally or legally, there is no reason to believe that a “chartered” business is any more or less likely to be successful than those without a charter.

Nevertheless, the Mercantile Bank of Bombay felt that it was at a competitive disadvantage and did not want to be outdone by the regal sounding Chartered Bank of India, Australia and China, which had a habit of promoting itself as being “Incorporated in England by Royal Charter 1853.” Therefore, in 1857, the Mercantile Bank of Bombay also obtained a Royal Charter and renamed itself the Chartered Mercantile Bank of India, London and China, and moved its head office from Bombay to London. In doing so, the Chartered Mercantile Bank of India, London and China was often mixed up with the Chartered Bank of India, Australia and China – the fact that both banks were founded in 1853 doubtlessly added to the confusion.

Following the tradition in Great Britain at the time, banknotes in the British colonies were often issued by certain authorised commercial banks. After receiving the Royal Charter, the Chartered Mercantile Bank of India, London and China gained the privilege to issue banknotes in Hong Kong (starting in 1859), in Penang (starting in the 1860s) and later also in Malacca and Singapore. As a matter of fact, the bank played a prominent role in the early banking development in the Straits Settlements and the Federated Malay States, which became today’s Malaysia and Singapore.

In 1892, however, the Chartered Mercantile Bank suffered a liquidity crisis and had its Royal Charter revoked. It was re-capitalised as the Mercantile Bank of India in 1893, but it ceased to issue all banknotes.

In the early 20^th century, growth returned to the Mercantile Bank of India and it, for example, acquired the locally-incorporated Bank of Calcutta (founded 1895). 

In 1912, the Mercantile Bank regained the privilege to issue banknotes in Hong Kong. It also issued banknotes in the Chinese port city of Shanghai for years during the early 20^th century. (Between 1846 and 1945, Great Britain controlled “concessions” -- extraterritorial jurisdictions -- in China, and the Shanghai International Settlement was probably the most well-known one of all.) Surviving 19^th century banknotes issued by the Chartered Mercantile Bank of India, London and China from Hong Kong, Singapore, Malacca, and Penang; and even mid-20^th century examples by the Mercantile Bank of India from Hong Kong and Shanghai are very rare, and can command very significant valuations at auctions.

In 1916, the Mercantile Bank of India took over the Bank of Mauritius. This was the third bank of the same name – none of them were related to one another -- to have existed in Mauritius. This particular Bank of Mauritius was established in 1894 to take over the local operations of the Oriental Bank Corporation that had gone bankrupt. The Oriental Bank Corporation was another prominent Anglo-Indian bank that was active in British India, Ceylon, Singapore, Hong Kong and China in the mid-19^th century before its demise.

While rival British overseas banks like the Chartered Bank of India, Australia and China and The Hongkong and Shanghai Banking Corporation (HSBC) have had a strong focus in Hong Kong, China and the rest of the Far East, the Mercantile Bank’s main focus was in British India, where the bank had half of its branches.

In 1947, British India gained independence and became India and Pakistan. The newly formed nation-states wanted to nurture their own domestic industries and became increasingly restrictive to the British businesses including the Mercantile Bank of India. New regulations in place banned foreign banks from opening new branches, and growth in the 1950s for the Mercantile Bank in India was much hampered.

Towards the late 1950s, it was believed that the Mercantile Bank of India would be vulnerable to a takeover by an American bank eager to have a presence (however restrictive) in the Indian market. Ironically, right around the same time, the decision was made to drop the reference of India from the name and the bank became the Mercantile Bank Ltd.

In 1957, The Hongkong and Shanghai Banking Corporation pre-empted the rumoured American interest by first acquiring a 20% stake in Mercantile Bank Ltd., before fully acquiring the remaining shares in 1959.

HSBC kept the Mercantile Bank operations separate and independent for many years. In 1966, Mercantile Bank relocated its head office from London to Hong Kong. Interestingly, Mercantile Bank continued to be a banknote issuer in Hong Kong until 1974 (along with HSBC and the Standard Chartered Bank). In 1984, finally Mercantile Bank’s operations were integrated into HSBC, except for the small Thai operations, which were sold to Citibank. The sale of this small unit of the Mercantile Bank appeared to have caused much confusion about the final years of the bank, as many sources, including Wikipedia, often suggest mistakenly that HSBC sold the entire Mercantile Bank to Citibank in 1984.

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Great Britain Bank Mergers & Acquisitions (Clydesdale Bank, Yorkshire Bank, Virgin Money)

Photo: The Virgin Money lounge in Sheffield, Yorkshire, has a complimentary bowling alley for clients to enjoy. The insets show a Clydesdale Bank branch at London's Piccadilly Circus, and a Yorkshire Bank branch in Whitby, North Yorkshire.

Photo Sources: Virgin Money lounge in Sheffield, Virgin Money; Clydesdale Bank in London, Swire Chin; Yorkshire Bank in Whitby: Swire Chin.

CYBG (Clydesdale Yorkshire Bank Group d.b.a. Virgin Money)

The Clydesdale Bank, Yorkshire Bank and Virgin Money each has a complex history and relationship with each other since their separate beginnings. They were established independently of each other but interestingly, all three banks have been under partial or full Australian ownership at one some point. Glasgow-based CYBG plc is the parent company of Clydesdale Bank and Yorkshire Bank, which in May 2018 agreed to acquire challenger bank Virgin Money for GBP 1.7-billion.

CYBG plc (Clydesdale Bank lineage)

The Clydesdale Banking Company was founded by Glasgow’s businessmen in May 1838 in the joint-stock format to serve the local market. The Clyde is a major river that flows through Glasgow, and the vale area surrounding the river is called Clydesdale. Right from its start, offices were opened in the industrial city of Glasgow as well as in the capital city of Edinburgh about 40 miles to the east. Within its first year of operations, Clydesdale also opened two country (rural) branches in Falkirk and Campbeltown.

The 19^th century was the hundred years that witnessed the most rapid, disruptive and yet transformative technological, social and economic changes in British history. Newly-invented machinery greatly expanded the output of consumer and industrial goods, as well as of agricultural produce. Meanwhile, the ever-expanding railway network not only made transportation of raw materials, finished goods, people and communications (such as news, letters and parcels) much faster and cheaper, it also allowed perishable produce to reach destinations much farther than previously possible before spoiling.

This mechanization and transportation revolution, which was part of the overall industrial revolution, favoured larger-scale farms and manufacturing factories over the one-person artisan shops and small-scale farms that previously dominated the economy. This shift towards larger scale operations required much larger capital investments and financings, and the formerly local banks and small private banks were ill-capitalized to support and take on the risk of these burgeoning capital-intensive industries. During the mid-19^th century, many of these small provincial or private banks amalgamated with each other, and converted into joint-stock banks that could raise capital by issuing new shares to shareholders.

In 1840, Clydesdale Bank took over the Greenock Union Bank. Despite that, by 1857, it still only had 13 branches and remained a smallish bank. It was perhaps this prudence that kept the bank in relative financial health, for in that same year, the 101-branch Western Bank of Scotland, the second largest bank in Scotland at the time after the Royal Bank of Scotland (RBS), collapsed during a general financial panic, and Western Bank’s operations were broken up and taken over by other rivals, including the RBS, Clydesdale and others. During the same crisis, the City of Glasgow Bank also suspended payments (operations), and likewise some operations were transferred to Clydesdale Bank, which doubled its number of its branches.

As London rose to become the premier financial centre of the world in the second half of the 19^th century, Clydesdale Bank opened a branch in London in 1877. Back in 1874, Clydesdale Bank had opened a few branches in Northern England in the area that is right next to its Scottish home market. But beyond the these few “cross-border” branches, banking in England, Scotland and Northern Ireland has historically been quite separate from each other -- in other words -- English banks have very few branches and minuscule market share in Scotland and Northern Ireland, and vice versa for the Scottish and Northern Irish banks. This did not mean that banks from all three "countries" could not acquire or control banks in each other's territories, though this typically involved the much more powerful English banks having a stake in Scottish or Northern Irish banks rather than the other way around. (Unlike Scotland and Northern Ireland, Wales is not a separate legal jurisdiction and its legal system is integrated with that of England.) 

Shortly after World War I, the smaller and weaker Scottish banks found themselves facing challenging market conditions, and a wave of Anglo-Scottish takeovers happened. In 1919, London City and Midland Bank (later becoming Midland Bank and today’s HSBC), at the time the world’s largest bank based on deposits, took over Clydesdale Bank.  Then in 1923, Midland further acquired the North of Scotland Bank. As in all Anglo-Scottish or Anglo-Irish bank takeovers, the management, corporate identities, boards of directors and operations of the acquired banks remain separate from the parent bank. Hence, both Clydesdale and the North of Scotland enjoyed to a large degree their autonomies. This only changed in 1950 when Midland’s two Scottish units were combined to become the Clydesdale and North of Scotland Bank. Eventually, the rather cumbersome name was shortened back to Clydesdale Bank.

In early-1980s, Midland Bank itself became mired in the Latin American debt crisis, and had to divest its loss-making businesses and raise new funds to shore up its depleted capital. In 1987, Midland Bank sold Clydesdale Bank in Scotland (for GBP 420-million) and Northern Bank in Northern Ireland and Ireland (for a symbolic AUD $2) to the National Australia Bank (NAB) group. NAB was at the time keen to expand outside of its Australian and New Zealand home markets. In 1990, NAB further acquired Yorkshire Bank for GBP 976-million (see separate section below). These three purchases gave NAB a meaningful but if only regional footprint in Northern England, Scotland, Ireland and Northern Ireland, but not in the economic powerhouse in Greater London and Southern England.

During the early 2010s, however, Clydesdale Bank and Yorkshire Bank were caught up in an industry-wide (in Great Britain) unethical and fraudulent mis-selling and mis-handling of a financial product known as payment protection insurance (PPI), negatively impacting hundreds of thousands of affected clients.

Worse still, this PPI scandal broke out in the midst of the decade-long worldwide credit crisis that began in 2007, which resulted in soaring loan and trading losses, ultra-low interest rate spreads (which adversely impacted bank profitability), reduced demands for loans, little appetite for merger and other investment banking activities, and the need to unwind risky and complex financial positions – a process often called de-leveraging.

By 2014, NAB concluded its British operations were too small to compete efficiently with the bigger players in the market, and that it would be unaffordably costly to try to win market share. A decision was made to exit the United Kingdom retail banking market. However, by this time the PPI scandal had blown up into a very expensive mistake for both Clydesdale and Yorkshire Banks. The two banks eventually had to set aside at least GBP 2.1-billion of potential compensation to the PPI claimants.  In order to make Clydesdale and Yorkshire Banks a financially viable autonomous business, NAB agreed to cover GBP 1.58-billion of the PPI scandal provisions to relieve their financial pressure.

Finally, in early 2016, NAB spun off and floated Clydesdale Bank and Yorkshire Bank under a holding company called CYBG plc. NAB transferred 75% of CYBG shares to NAB shareholders, and sold the remaining 25% stake to institutional shareholders. To allow the Australian shareholders easy access to trade CYBG shares, CYBG was listed on both the London Stock Exchange and the Australian Securities Exchange.

CYBG plc (Yorkshire Bank lineage)

In 1859, Yorkshireman Colonel Edward Akroyd, a wealthy owner of large textile mills in Halifax, founded the West Riding of Yorkshire Provident Society and Penny Savings Bank. His wish was to encourage his workers to handle income prudently and to save for a rainy day. Col. Akroyd was one of those Victorian benevolent industrialists who strongly believed in caring for and improving the livelihoods of his employees and their families. As a matter of fact, he even had housing complexes and a school built right next to some of the factories where his workers worked.

As a provident society, the bank was originally a co-operative (a mutual bank). The new bank took off to a great start and began setting up offices in nearby towns. Being Britain’s largest county, Yorkshire’s administration was divided into three “ridings”: East, West and South. Col. Akroyd initially only had planned to operate in the West Riding. But in 1861, the bank abandoned both the “provident society” format and the West Riding focus, becoming the Yorkshire Penny Bank with well over 100 offices across the entire county.

Banking back then, particularly for a penny bank catering to the working lower class, was very different from today. The offices often amounted to no more than a counter located in a village school room, or a church basement, and typically only opened for business one evening a week. Yorkshire Penny Bank was said to be the first bank in the world to introduce the “school bank” concept in 1865, maintaining accounts for school children (as opposed to having an office inside a school for working adult clients). The bank’s first full-time daily branch opened in 1871. In any case, the Yorkshire Penny Bank became a local institution for the county.

Col. Edward Akroyd was so much loved and respected that some 15,000 mourners showed up at his funeral in 1887. His former residence in Halifax is now the Bankfield Museum.

In the 1911, however, an audit determined that the Yorkshire Penny Bank’s reserves were significantly underfunded and the Bank of England brokered a joint rescue-takeover of the bank by a long list of English clearing banks: National Provincial Bank, Westminster Bank, William Decons Bank, Lloyds Bank, Barclays Bank and Glyn Mills.

At its centenary in 1959, the bank adopted a simplified name of Yorkshire Bank.

In 1990, the National Australia Bank (NAB) group was keen to expand in the British Isles after its 1987 takeover of the Clydesdale Bank (in Scotland) and Northern Bank (in Northern Ireland and Ireland) from Midland Bank. Meanwhile, the English banks controlling Yorkshire Bank were also eager to divest their minority stakes, and Yorkshire Bank was sold to NAB for GBP 976-million (USD $1.65-billion). At that time, National Westminster (NatWest) held 40% of Yorkshire, Barclays (32%), Lloyds (20%) and the Royal Bank of Scotland (the remaining 8%).

Virgin Money (pre-CYBG takeover)

Long dominated by historical banks established in the 1600s, 1700s and 1800s, the British banking industry witnessed monumental changes after the 2007 global credit crisis and the technological disruption introduced by the internet and mobile phone in the 2010s. One result of these changes was the rapid emergence of new, mostly “branchless” banks, such as Virgin Money. This happened because: 1) the business of banking has moved rapidly towards internet and mobile-phone banking away from in-person branch banking; 2) the traditional “High Street” banks were busily cutting back branches and staff to reduce costs following heavy losses from the credit crisis; and 3) new banks with minimal numbers of branches have lower overhead costs and can offer better rates and prices for their clients. In the United Kingdom, these new banks are called “challenger banks” as they aimed to challenge the long-established “High Street” banks.

Virgin Money itself has a very short history, having been established only in 1995 initially as “Virgin Direct Personal Financial Service Ltd.” by Sir Richard Branson’s Virgin Group. Initially Virgin Direct was an income personal equity plan (known as “income PEP”) platform as a 50-50 partnership with insurer and asset manager Norwich Union. The income PEP was a registered account that allowed people over the age of 18 to invest a maximum annual amount in shares of British companies tax-free, meaning that the income and capital gains generated within the income PEP were not taxable. In 1999, the British government replaced the income PEP with the “Individual Savings Account” (ISA), which means that people are now able to put their money into a savings account and term deposit to earn interest tax-free, instead of being required to invest only in stocks that are more risky.

By having a lower maintenance fees than other financial institutions, Virgin Direct claimed that it received 4,000 phone calls on its opening day, and attracted GBP 42-million of assets under management in the first month.

In 1996, Virgin launched the Virgin Personal Pension product, again using the easy-to-understand and low-fee strategy to lure new clients from the traditional financial-services firms.

By 1997, Virgin Direct had already attracted GBP 1-billion in funds under management, at which time it launched the One account in partnership with the Royal Bank of Scotland (RBS) and Australian financial service group AMP (originally Australian Mutual Provident) to offer the “offset mortgage” product. At its launch, RBS owned 50% of the One account platform, with Virgin Direct and AMP each owning a 25% stake.

A traditional mortgage loan typically has a set interest rate, a fixed repayment schedule, and strict limitations on how much, if any, of the outstanding mortgage loan can be repaid ahead of (or behind) schedule. An offset mortgage like the Virgin One, on the other hand, charges interest on the outstanding mortgage balance less the balances in the borrower’s savings accounts on a daily basis. In other words, every time money is deposited into the borrower’s savings account (such as a payroll deposit), the balance of the mortgage loan drops (hence “is offset”) by that deposit. This flexible mortgage payment option has the potential to speed up significantly the full repayment of the loan than a traditional mortgage.

Initially available only to Virgin Direct’s 200,000-strong income PEP and Personal Pension clients, the One account was so popular that it was expanded to the general public by 1998.

Also in 1997, Australia’s AMP acquired Norwich Union’s 50% stake in Virgin Direct. As part of the agreement, AMP gained the worldwide licence to use the “Virgin” brand in retail financial services.

In 2000, Virgin Group once again partnered with AMP to launch “virginmoney.com” as a one-stop on-line “supermarket” for financial products such as ISAs, unit trusts (mutual funds), mortgages and life insurance.

In 2001, the Royal Bank of Scotland took over the Virgin One mortgage platform from Virgin Direct (25%) and AMP (25%) for about GBP 100-million. Virgin One had about 70,000 accounts and GBP 3.75-billion of mortgage receivables at that time.

In 2002, Virgin Direct and VirginMoney.com were amalgamated to become Virgin Money, and continued to be jointly-owned by Virgin Group and AMP. Meanwhile, Virgin Money launched its first credit card offering. Despite the agreement with AMP to license the “Virgin Direct” brand worldwide in 1997, it was only in 2003 that Virgin Money Australia was launched to offer credit card products outside of Britain for the first time. Virgin Money Australia eventually expanded into the superannuation, mortgage and insurance business. Further expansion saw Virgin Money opening for business in South Africa in 2006 and the United States in 2007. However, the American banking market is incredibly competitive and difficult to penetrate. Merely three years late, Virgin Money US was shuttered. And the South African operations also remained minuscule.

In 2004, AMP spun off and floated its British operations into HHG plc, which included the 50% stake in Virgin Money, which HHG immediately sold to Virgin Group for GBP 90-million (AUD $220-million), hence allowing Virgin Group to fully control Virgin Money for the first time. Even though by now Virgin Money had over 700,000 clients across Britain and GBP 4.7-billion of client assets, profits remained very slim.

In 2010, American billionaire financier Wilbur Ross acquired a 21% stake in Virgin Money for GBP 100-million. The following year, Virgin Money and Virgin Group, backed by Wilbur Ross and Abu Dhabi investor Stanhope Investments, took over the nationalized regional bank Northern Rock from the British Treasury for GBP 747-million in cash plus GBP 150-million of debt funding. The British government had sunk GBP 1.4-billion back in 2007 to rescue and nationalize the bankrupt Northern Rock, which had 75 branches at the time of the Virgin acquisition.

Following the combination, Virgin Group’s stake in Virgin Money was diluted to 46%, with Wilbur Ross’s various investment vehicles holding 44% and Stanhope Investments the remaining 10%.

The year 2011 also saw the opening of the first Virgin Money lounges in Edinburgh and Norwich. Virgin Money lounges are meant to give clients a place to relax and unwind. The lounges offer complimentary refreshments, wi-fi internet service, newspapers, magazines and iPads. Each lounge has a unique design, such as the imitation of the interior of a Virgin Atlantic Airways airliner, or a bowling alley, or a cinema. Virgin Money lounges are offered free of charge for community events after hours. As of 2018, there are eight Virgin Money lounges.

Like its British parent, Virgin Money Australia was never particularly successful nor profitable.  In 2013, conceding that its Australian business failed to gain market share and deliver anticipated profitability, Virgin Money sold Virgin Money Australia to local regional lender Bank of Queensland for AUD $40-million.

In 2014, Virgin Money was floated on London stock exchange when owners Sir Richard Branson’s Virgin Group and Wilbur Ross each unloaded about 15% of the bank. Following the IPO, both investors retained about one-third of the British bank.

CYBG plc (doing business as Virgin Money)

In May 2018, CYBG agreed to take over Virgin Money for GBP 1.7-billion (USD $2.3-billion) in cash. The combined operations would become the No. 6 bank in the United Kingdom with 6 million clients. Despite that, the new bank would still only control about 2% of the market share, compared with market leader Lloyds' 24% share. Virgin Money’s 74 branches will be combined into CYBG’s 169-branch network, but branch closures and 1,500 job losses are planned. Existing CYBG shareholders would own 62% of the new bank, with existing Virgin Money holders owning the rest. Virgin Group’s stake in Virgin Money will fall from 34.8% to 13.1%.

In a rather controversial and puzzling arrangement, the new bank plans to adopt the brand “Virgin Money” for all of its “High Street” (i.e. retail banking) operations and will pay an annual GBP 12-million license fee to Virgin Group for the first three years, rising to GBP 15-million in the fourth year, then a 1% annual royalty based on revenue to Sir Richard Branson. Some existing clients and employees of both Clydesdale and Yorkshires are also said to be dismayed about the branding changes.

Furthermore, as one of the three clearing banks in Scotland, Clydesdale Bank has been issuing part of the Scottish Pound banknotes since its establishment in 1838. In 2019 Virgin Money announced that even though the former brands of Clydesdale Bank and Yorkshire Bank would terminate by 2021, it confusingly would continue to issue Scottish banknotes in the name of Clydesdale Bank.

In March 2024, British mutual bank Nationwide Building Society agreed to acquire Virgin Money for GBP 2.9-billion in cash. As the sixth largest bank in Britain in terms of total assets, Virgin Money has 6.6-million personal and business clients with total loans of GBP 72.8-billion, including a mortgage portfolio of GBP 57.1-billion and deposits of GBP 67.3-billion. The combination would expand Nationwide's branch network to 696, second largest in the UK only to Lloyds Banking Group; and assets totalling GBP 366-billion. Nationwide would overtake NatWest to become the second largest mortgage lender in the country. Nationwide intends to retain Virgin Money's 7,300 employees in the near term. The Virgin Money branding will be terminated eventually, however.

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Great Britain Bank Mergers & Acquisitions (NatWest Group since 2020)

Photo: The former Royal Bank of Scotland branch at 171 Tottenham Court Road, central London. This photo was taken in 2007 during my Yorkshire and London trip. In 2010, all 311 Royal Bank of Scotland-branded branches in England and Wales were sold to Banco Santander. RBS still has an extensive network in England and Wales through its NatWest operations.    

NatWest Group plc since 2020 (formerly The Royal Bank of Scotland Group plc)

During the 17th and 18th centuries, Scotland went through a lengthy period of economic and political upheavals, heightened religious tension, and even the occasional wars with England. Back in 1698, one-quarter of Scotland’s wealth vanished when its attempt to establish the Darien trading colony in modern-day Panama failed miserably. Politically, the Act of Settlement of 1701 rescinded the House of Stuart's right to the throne of England and Scotland. Six years later, Scotland reluctantly agreed to a political union with England, creating the United Kingdom of Great Britain. The political union abolished the Scots parliament, yet gave Scotland full trade access to the English market and all her overseas colonies and trading partners.

It was during this turbulent time that the Royal Bank of Scotland (RBS) was founded in Edinburgh in 1727 by Royal Charter. It's the second joint-stock commercial bank to be founded in Scotland. The Royal Bank’s founding ended Bank of Scotland's monopoly since 1695. Right from the start, the two Scottish banks have been bitter rivals. During their early co-existence, both the Royal Bank and Bank of Scotland would hoard large quantities of the other bank’s banknotes, then they would present them for cash payment. Neither succeeded in causing a liquidity crisis at their rival, however, and both eventually accepted each other’s presence.

During the 1745 Jacobite Rising against King George II (House of Hanover), Bonnie Prince Charles’ (House of Stuart) army occupied Edinburgh and reached within 200 kms of London, putting the entire Britain into a political and constitutional crisis. However, King George’s army fought back and defeated the Jacobites in April 1746. During the occupation of Edinburgh, the Royal Bank temporarily moved its cash, precious metals and important documents to the Edinburgh Castle for safekeeping.

The Jacobite Risings alarmed the English greatly, and London quickly imposed oppressive measures to punish and quell those who supported the Stuart prince. The Scottish way of life was harshly suppressed with the banning of the tartan and the bagpipes. The clan-chiefs system was abolished and tens of thousands of people were evicted from their land. Despite all this hardship, however, southern Scotland’s industries boomed thanks to the union with England, which gave Scotland new access to a huge source of raw materials from England’s colonies, as well as the vast world market for Scottish products. Glasgow rapidly became the industrial heartland of the British Empire and its population exploded from 40,000 to 500,000 from 1780 to 1880.

In 1783, the Royal Bank opened a branch in Glasgow to serve the thriving industries. The Glasgow branch was the bank’s first outside of Edinburgh. The branch banking that people have come to be accustomed to in a modern society developed very slowly in the beginning. In the case of the Royal Bank of Scotland, a small network of branch outside of Edinburgh and Glasgow only took shape commencing in the 1830s, over 100 years following the bank’s founding. In 1864, the bank made its first ever banking acquisition when the Dundee Banking Co. was taken over.

Historically, banking in England, Scotland and Northern Ireland has always been quite separate from each other -- in other words -- English banks have very few branches and minuscule market share in Scotland and Northern Ireland, and vice versa for the Scottish and Northern Irish banks. (In terms of laws, business and banking, England and Wales are much more integrated.) This did not mean that banks from all three "countries" cannot acquire banks in each other's territories, though that usually means the much more powerful English banks buying Scottish and Northern Irish banks rather than vice versa. This historic trend would change in 2000, when the Royal Bank of Scotland swallowed the much larger National Westminster Bank.

With London’s rapid rise as the international financial centre, the bank opened an office on Bishopsgate in the City in 1874. By the time World War I broke out, Royal Bank’s network had grown to 158 branches. As a large number of male staff enlisted to the army, women began to form a meaningful percentage of the bank’s staff for the first time. The Royal Bank continued its expansion south of the Scottish border with the acquisition of London private banking firm Messrs. Drummond in 1924 and the Williams Deacon’s Bank in 1930, which had an extensive network in the northwest of England.

In 1939, RBS bought Glyn, Mills & Co. which operated exclusively in Central London. Both Williams Deacon’s Bank and Glyn, Mills & Co. continued to operate under their own brands until 1970, when the bank’s 300 branches in England and Wales were rebranded Williams & Glyn’s Bank.

During the 1950s and 1960s, RBS launched personal loans for the first time, and further expanded its branch network. It also introduced a pre-paid form of cash-dispensing machine, the forerunner of the ATM. A New York office was opened in 1960, marking the bank’s first overseas office.

In 1969, the Royal Bank of Scotland and the National Commercial Bank of Scotland amalgamated. The National and Commercial Banking Group Ltd. was created as the parent company holding the enlarged Royal Bank. In 1979, National and Commercial adopted the current name the Royal Bank of Scotland Group.

In 1972, RBS became the first British clearing bank to offer residential mortgage loans. 1973, all of the bank’s branches were linked up to its Edinburgh head office by a computer. The 1970s was a good time for the bank as the Scottish economy flourished when oil was discovered in the North Sea.

In 1980, the Royal Bank of Scotland became the subject of a bidding war between British overseas bank Standard Chartered and the Hongkong and Shanghai Banking Corp. (then of Hong Kong, now HSBC). Fears that Standard Chartered would shut down RBS’ head office in Edinburgh, or worse still, that the Scottish bank should be controlled by a bank based in a colony, aroused much opposition in Scotland. In the end, Britain's Monopolies and Mergers Commission ruled that a takeover of RBS by the Hongkong & Shanghai would not be in the interests of Scotland. The remaining bid from Standard Chartered also failed to win government approval, and RBS survived as an independent bank.

In 1985, Williams & Glyn’s Bank was fully integrated into the Royal Bank of Scotland. In the same year, the bank introduced a novel product called Direct Line to sell auto insurance over the telephone. Direct Line became an instant success.

RBS’ first foray into the American personal banking market began in 1988 when it acquired Citizens Financial of Providence, Rhode Island for USD $440-million. Back home in Scotland, 24-hour telephone banking was launched in 1994, followed by internet banking in 1997.

Recent transaction(s):

• In 2000, RBS joined the major league by taking over the much larger National Westminster Bank for GBP 21.0-billion (USD $34.0-billion).
• In 2000, Citizens Financial bought Boston-based UST Corp. for USD $1.4-billion (GBP 875-million).
• In 2001, Citizens Financial bought Mellon Bank's retail banking division for USD $2.1-billion.
• In 2002, Citizens Financial bought Medford Bancorp for USD $273-million. Medford Bank operated 19 branches and 24 ATMs in Massachusetts.
• In 2003, Citizens Financial bought Commonwealth Bancorp for USD $450-million. Norristown, Pennsylvania-based Commonwealth Bancorp (unrelated to Australia's Commonwealth Bank) operated 60 branches and 61 ATMs.
• Also in 2003, Citizens Financial bought Port Financial Corp. for USD $285-million. Port Financial was the parent of CambridgePort Bank of Boston, which had 11 branches and 15 ATMs.
• Also in 2003, RBS bought Banco Santander's German unit Santander Direkt Bank for Eur 486-million. Santander Direkt Bank offered credit cards and personal loans and had 540,000 clients in Germany. As part of the deal, RBS sold Coutts's Latin American private banking business to Banco Santander for a USD $75-million premium. Coutts is RBS' private banking division. The Latin American unit sold was based in Miami.
• Also in 2003, RBS acquired Churchill Insurance from Credit Suisse for GBP 1.1-billion (USD $1.8-billion).
• Also in 2003, RBS bought Swiss private bank Bank von Ernst from Germany's Bayerische Hypo- und Vereinsbank (later HVB Group) for GBP 228-million. Bayerische Hypo- und Vereinsbank had suffered significant losses and was in need of restoring its capital.
• In 2004, RBS’ Irish unit Ulster Bank bought Ireland's First Active for Eur 887-million (GBP 617-million). First Active specialized in mortgages and personal banking.
• In 2004, Citizens Financial bought Connecticut's People's Bank for USD $360-million.
• In 2004, Citizens Financial bought Charter One Financial for USD $10.5-billion (GBP 5.8-billion). Cleveland-based Charter One had 616 branches in the U.S. Northeast and Midwest.
• In 2005, RBS led a consortium that included Hong Kong billionaire Li Ka-Shing and Merrill Lynch to buy 10% of Bank of China for USD $3.1-billion.
• In 2006, Citizens Financial bought GreatBanc Inc. for USD $180-million. GreatBanc had 10 offices in the Chicago area.
• In 2007, RBS formed a joint-venture providing commodities trading, marketing and risk management products with Sempra Energy. RBS bought 51% of Sempra Commodities from Sempra Energy for GBP 669-million (USD $1.35-billion). Sempra Commodities was renamed RBS Sempra Commodities LLP.
• In October 2007, after a six-month battle, RBS, along with Belgium's Fortis and Spain's Banco Santander defeated Barclays in acquiring ABN AMRO Holding NV for Eur 70.0-billion (USD $101.1-billion) in cash and stock. The deal was the world's largest banking M&A. The three banks then broke up ABN AMRO's global operations amongst themselves with RBS taking over ABN AMRO's retail banking business outside of the Netherlands, Brazil and Italy, as well as its global investment banking operations. Until the break-up was completed, RBS held 38.3% of ABN AMRO, Fortis held 33.8%, Santander held 27.9%. Click here for a detailed timeline of the takeover battle for ABN AMRO.
• In 2008, in a bid to restore its severely-depleted capital, RBS sold its 50% stake in Tesco Personal Finance to partner supermarket operator Tesco plc for GBP 1-billion (USD $1.96-billion). Tesco subsequently applied for a banking licence of its own from the British Financial Services Authority.
• Following years of unrestrained credit-based spending and real estate speculation, air began to leak out of the global asset bubble in 2007, cumulating into a full-blown housing market collapse in 2008. As mortgage borrowers defaulted on their mortgages, banks around the world suffered billions of losses from bad loans and collateralized debt obligations (CDOs). When panicky institutional investors withdrew from the short-term money market, banks found themselves short of the capital needed to finance their lending activities, causing major financial institutions in the U.S., Britain, Belgium, Germany, and Iceland to fail. During an emergency summit held in Washington D.C. in October 2008, the world’s top economies pledged to bail out all major banks in financial difficulties and to provide unlimited loan guarantees for interbank lending.
• Under the partial nationalization scheme, the British Treasury promised to subscribe to a maximum of GBP 37-billion (USD $64-billion, Eur 50-billion) of new shares from RBS, HBOS and Lloyds TSB.
• In December 2008, RBS raised GBP 19.7-billion in new capital, which consisted of GBP 14.7-billion in ordinary shares (rights issue) and GBP 5-billion in preference shares with a yield of 12% p.a. As private investors refused to take up the rights issue offer, the British government ended up backstopping the issue and became holder of 60% of RBS. It was only six months earlier that RBS raised GBP 12-billion in new capital from another massive rights issue. By the time it accepted the latest government bail-out, its market capitalization had fallen below that to GBP 11-billion.
• In early 2009, RBS unloaded its 4.26% stake in Bank of China for GBP 1.6-billion (USD $2.37-billion, HKD $18.4-billion).
• On 2009-01-19, news of RBS’ GBP 28-billion (USD $41-billion) loss in 2009 sent its share prices plunging by 67% to GBP 0.16 per share. The panic selling was caused by fears that RBS would be nationalized with its shares becoming worthless. To alleviate RBS’ cash expense, the British government swapped the GBP 5-billion preferred securities that it just bought a month earlier for ordinary shares, raising the government’s holding in RBS to 70%. The swap eliminated the bank’s annual GBP 600-million dividend expense.
• During the course of 2009, RBS and the British Treasury agreed to more government bailout to limit future loan losses at the ailing bank. Under the Asset Protection Scheme (APS), RBS issued GBP 25.5-billion (USD $36.58-billion) of non-voting, convertible class “B” shares to the British government in return for state insurance against GBP 282-billion (USD $404-billion) of potential losses. RBS would bear the first GBP 60-billion of the potential losses from the loan pool; whereas any further losses from the pool would be borne 90% by the government and 10% by RBS. At RBS’ option, it could issue HM Treasury another GBP 8-billion (USD $11.5-billion) of class “B” shares in the future. RBS agreed to forfeit its ability to claim certain U.K. tax losses or allowances. With the latest re-capitalization scheme, the British government’s economic interest in RBS rose to 84.4%.
• In 2009, RBS sold its 50% stake in Spanish car insurer Linea Directa Aseguardora to its joint-venture partner Bankinter for Eur 426-million (USD $565-million).
• Also in 2009, RBS sold its operations in six Asian countries to Australia and New Zealand Banking Group (ANZ) for USD $550-million (AUD $656-million, GBP 324-million). The sale included 54 branches and about 2 million clients in Hong Kong, Singapore, Taiwan, Philippines, Vietnam and Indonesia.
• In February 2010, RBS’s commodity-trading joint-venture RBS Sempra sold its metals and energy assets outside of the U.S. to JPMorgan Chase for USD $1.74-billion (GBP 1.11-billion). RBS would receive about USD $799-million from the sale and Sempra Energy would receive USD $940-million. RBS Sempra was still looking for a buyer for its U.S.-based commodity-trading business.
• In June 2010, RBS raised GBP 137-million from three overseas disposals. First, it sold its Pakistani unit (75 branches) to Faysal Bank for GBP 34-million (USD $50-million). Then it sold its United Arab Emirates operations to the Abu Dhabi Commercial Bank for GBP 68-million (USD $100-million). Finally, it sold its Kazakhstani business (4 branches) to HSBC for GBP 35-million (USD $52-million).
• Also in June 2010, RBS sold its Indian retail banking operations to HSBC for an undisclosed amount. RBS had 1.1 million clients and 31 branches in India.
• In August 2010, RBS sold 311 RBS branches in England and Wales and 7 NatWest branches in Scotland to Banco Santander for GBP 1.65-billion (Eur 1.99-billion, USD $2.63-billion). The branch sale was part of the EU-imposed requirements for RBS to receive state aid from the British government (see update below).
• Also in August 2010, RBS sold 80% of its global payment-handling unit WorldPay to Advent and Bain Capital for GBP 1.9-billion (USD $3.0-billion).
• In January 2012, RBS sold its Dublin-based airliner-leasing firm RBS Aviation Capital to Japan's Sumitomo Mitsui Financial Group and trading conglomerate Sumitomo Corp. for USD $7.3-billion. RBS Aviation Capital owned, managed or had orders for 329 commercial jet airliners.
• In March 2012, RBS sold Coutts private bank's client accounts in Latin America, the Caribbean and Africa, as well as some of Coutt's staff in Geneva and the Cayman Islands, to the Royal Bank of Canada. The business sold had client assets of about GBP 1.5-billion (CAD $2.4-billion). Terms of the transaction were not disclosed.
• In October 2012, Santander cancelled the agreement to buy 316 British branches and 1.8-million client accounts from RBS for GBP 1.65-billion, citing operational difficulties and two years of delays.  The deal's collapse dealt a major blow to RBS' effort to meet EU's requirements for accepting state aid from the British government. RBS said it would re-start the sale process by looking for other potential buyers.
• Also in October 2012, RBS floated 34.72% of its insurance unit Direct Line for GBP 911-million.  Then in March 2013, a further 16.78% of Direct Line was sold to institutional investors for GBP 507-million (USD $756-million). As conditions to accept state aid from the British government, RBS must sell at least 50% of Direct Line by the end of 2013 and all of it by the end of 2014.
• In September 2013, RBS sold a further 20% stake of Direct Line Group for GBP 630-million. Following the sale, RBS' stake in Direct Line is down to 28.5%.
• In February 2014, RBS sold 28.2% of Direct Line for about GBP1.1-billion (USD $1.8-billion). The final 0.3% stake of Direct Line would be retained as compensation for the insurer's executive long-term incentive plan. This sale marked RBS' full divestment of auto insurer Direct Line Group.
• In September 2014, RBS floated 25% of its U.S. banking operations Citizens Financial Group for USD 3.01-billion (GBP 1.8-billion).
• In March 2015, RBS sold another 24.7% of Citizens Financial Group for USD $3.2-billion. Then in July, another 18.4% of the U.S. bank was sold for USD $2.6-billion. At the same time, Citizens Financial Group bought USD $250-million worth of its shares from RBS for cancellation.
• Also in March 2015, RBS sold its non-British private banking operations to Switzerland's Union Bancaire Privée (UBP). The sale included Coutts' and Adam & Co.'s clients in Switzerland, Monaco, UAE, Qatar, Hong Kong and Singapore, which had GBP 22.3-billion (CHF 32.0-billion) of assets under management. Terms of the sale were not announced. 
• In October 2015, RBS sold its last 20.9% stake of Citizens Financial Group for USD $2.58-billion. This sale marked the full divestment of RBS's American retail banking operations.
• In May 2018, Saudi British Bank (SABB) agreed to take over fellow Saudi Arabian-based Alawwal Bank for SAR 18.6-billion (GBP 3.68-billion, USD $4.96-billion). SABB is 40% owned by Anglo-Hong Kong bank HSBC Holdings, whereas Alawwal Bank is 40% owned by RBS Holdings NV, a consortium formed in 2007 by RBS, Banco Santander and Fortis to jointly acquire Dutch bank ABN AMRO Holding. RBS's indirect stake in Alawwal is 15%. The preliminary agreement in non-binding and subject to numerous conditions and approvals. Alawwal Bank traces its history to the 1926 Saudi Arabian (Jeddah) office of the Nederlandsche Handel-Maatschappij/ Netherlands Trading Society. In 1977, the Saudi Arabian operations of ABN AMRO (successor to the Netherlands Trading Society) were transferred to local interests with ABN AMRO retaining a 40% stake in the renamed Saudi Hollandi Bank, which in 2016 adopted the present name Alawwal Bank.
• In July 2020, The Royal Bank of Scotland Group changed its name to NatWest Group plc, taking up the English brand from which the group derives most of its revenue and profits. The group's Scottish operations would retain the RBS brand.
• In February 2021, NatWest announced that it would exit the Republic of Ireland eventually. The group's Irish operations, Ulster Bank, served 1.1-million clients through a 88-branch network with a staff of 2,800. No details of the withdrawal has been finalized yet but discussions are on-going to sell a portfolio of EUR 4.0-billion commercial loans to AIB, and its retail and small business operations to Permanent TSB. 
• In June 2021, NatWest agreed to sell EUR 4.2-billion of corporate and commercial loan book from its Ulster Bank unit to Allied Irish Banks for EUR 4.1-billion.  The sale price represents 97.63% of the par value of the loan portfolio.
• In December 2021, NatWest's Ulster Bank subsidiary agreed to sell EUR 7.56-billion of loan assets, client accounts along with 25 bank branches in the Republic of Ireland to Permanent tsb Group Holdings plc. The assets being sold included about EUR 7.0-billion of performing non-tracker residential mortgages, EUR 165-million of performing micro-SME (small, medium enterprise) loan book and EUR 400-million in the Lombard Asset Finance business. As part of the sale, Permanent tsb would pay NatWest EUR 4.8-billion in cash plus 90.9-million shares, giving NatWest a 16.66% stake in Permanent tsb Group Holdings.
• In June 2022, AIB further agreed to sell EUR 5.7-billion of performing tracker mortgages (representing 47,000 loans) to Allied Irish Banks for EUR 5.4-billion. The sale price represents 95.15% of the par value of the loan portfolio.

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Great Britain Bank Mergers & Acquisitions (NatWest Group up to 2000)

Photo: NatWest's office at the heart of the City (of London) at No. 1 Princes Street. NatWest has been a subsidiary of the Royal Bank of Scotland Group since 2000.

[Limited-coverage page] NatWest has been a subsidiary of the Royal Bank of Scotland Group since 2000. In July 2020, however, The Royal Bank of Scotland Group adopted a "new" old name NatWest Group. Events after 2000 are listed under the here.

National Westminster Bank plc (NatWest Group) 

The creation of National Westminster Bank was announced in 1968 when two of Britain's then Big Five, National Provincial Bank and Westminster Bank, agreed to merge. When the combination was completed in 1970, the resulting bank was the 5th largest in the world. In 2000, however, NatWest was taken over by the Royal Bank of Scotland Group but it continues to operate under its own identity in England and Wales.

National Provincial Bank Ltd. 

In 1833, Thomas Joplin and other investors founded the National Provincial Bank of England after five years of preparation. The bank’s mandate was to provide banking services in England and Wales outside of London, so it could issue its own banknotes. At the time, the Bank of England enjoyed a monopoly in issuing banknotes within a 65-mile perimeter of London. National Provincial did maintain a purely administrative head office in the British capital. 

From 1834 onwards, branches were opened in Gloucester, Birmingham, Boston and many other towns. By 1865, through the acquisitions of many private and joint-stock rivals, the bank already operated 122 branches across England and Wales. Soon it became clear that London was too important a market for the bank to avoid and a London branch was opened, requiring the bank to surrender its privilege to issue banknotes. 

In 1880, National Provincial restructured itself as a limited liability company and modified its name to the National Provincial Bank of England Ltd. By 1900, further expansion increased the number of branches to around 200. 

In 1917, National Provincial acquired 50% of Lloyds Bank (France) Ltd., renaming it Lloyds & National Provincial Foreign Bank Ltd. in 1919, with branches in London, France, Belgium and Switzerland. In 1918, National Provincial merged with the Union of London & Smiths Bank Ltd., which had more than 230 branches. The new bank with 700 branches adopted the cumbersome name of National Provincial & Union Bank of England Ltd. In 1920, the bank acquired London private bank Coutts & Co., which was founded in 1692 and today continues to offer wealth management services under its own brand as part of the Royal Bank of Scotland Group. 

In 1924, the bank’s name was simplified to National Provincial Bank Ltd. It continued to expand during the inter-war years and after World War II by acquiring other banks domestically. In 1954, it divested its stake in Lloyds & National Provincial Foreign Bank back to Lloyds Bank. National Provincial acquired the Isle of Man Bank Ltd. in 1961, which continues to trade under its own name today. In 1962, National Provincial took over District Bank, the seventh largest London clearing bank with a substantial branch network in Northern England and the northern Midlands counties. National Provincial kept the District Bank identity until its merger with Westminster Bank in 1970. At the time of the amalgamation, National Provincial and District Bank together had a network of about 2,200 branches. 

Westminster Bank Ltd. 

Westminster Bank can trace its roots to the London & Westminster Bank and the London & County Bank. London & Westminster was the older of the two and was officially founded in 1834 in the City. As its name suggested, the bank’s main activities focused on central London but it also acted as the City agent to various country and foreign banks. By 1905, the bank had a network of 35 branches. 

London & County Bank was created in 1836 in Southwark as the Surrey, Kent & Sussex Banking Company. Southwark was a borough in the county of Surrey at the time, but is now part of London. Just one year after its founding, the bank moved its head office to the City and in 1839, adopted the name London & County Banking Co. The bank grew rapidly during the second half of the 19th century through a series of acquisitions. By 1875, London & County had a network of 150 branches in London and Southern England, the most of any British bank. 

In 1909, London & County and London & Westminster decided to combine into the London, County & Westminster Bank. London & County’s network of more than 260 branches in London and south and east of London was merged with London & Westminster’s 37 London branches. In 1917, the bank expanded outside of southern England and acquired Belfast-based Ulster Bank, gaining 170 branches in Ireland. Ulster Bank had been weakened by the political and social upheavals gripping Ireland following the Easter Rising of 1916. In 1918, National Provincial merged with Parr’s Bank of Warrington and London (with 235 full branches) to become the London County Westminster & Parr’s Bank. The new entity now operated 700 branches. 

London County Westminster & Parr’s sensibly shortened its name to Westminster Bank in 1923. Throughout the 1920s, Westminster acquired more banks in Nottinghamshire, Yorkshire and Guernsey. By 1968, Westminster had a network of 1,400 branches across Britain, Ireland and Northern Ireland. 

National Westminster Bank Ltd. 

In 1968, National Provincial Bank (including its subsidiary District Bank) and Westminster Bank (including subsidiaries Isle of Man Bank and Ulster Bank) agreed to amalgamate into the National Westminster Bank. The new bank adopted the three arrow-heads logo, which is still in use today. When the merger was completed in 1970, the bank had 3,600 branches, though branch consolidation reduced that number to 3,200 by 1979. 

In 1972, National Westminster introduced Access, the bank’s first credit card. Throughout the 1970s, the bank actively participated in financing oil exploration in the North Sea, as well as created an international division. In 1979, National Westminster bought National Bank of North America, which had 141 branches in New York State, marking the bank’s first retail network in the United States. 

Soon after the British financial services industry was deregulated in 1986, National Westminster entered the securities business by buying up stock-brokers and underwriters. In 1988, the bank’s U.S. unit acquired New Jersey’s First Jersey National Corp. Following this purchase, National Westminster Bancorp’s network totalled 340 branches in New York and New Jersey. 

In 1991, a major restructuring programme saw the bank’s various private banking businesses combining under the Coutts & Co. brand. Coutts & Co. had been part of National Provincial Bank since 1920. Then in 1992, NatWest Markets was created to handle the group’s corporate and investment banking products. 

In 1993, the bank launched NatWest Life to embark on the life insurance business. NatWest sold its American retail bank National Westminster Bancorp to Fleet Financial in 1995 for GBP 2.3-billion (USD $3.6-billion) to focus on its British operations. In the same year, the name NatWest Group was officially adopted.

NatWest’s fortune took a dramatic turn in 1999 that eventually culminated in the loss of its independence. The events all began in September 1999 when NatWest announced a friendly deal to acquire U.K. insurer and unit trust (mutual fund) manager Legal & General plc for GBP 10.7-billion. To many analysts and institutional shareholders, however, swallowing up and integrating Legal & General was the last distraction NatWest needed when the bank’s core business was already underperforming. NatWest's share prices promptly tumbled by 26% over the next few weeks. 

Two days after NatWest's share collapse, on 1999-09-24, the Bank of Scotland launched a surprise GBP 21.0-billion (USD $34.3-billion) hostile bid to take over NatWest. 

By early October 1999, NatWest’s CEO Derek Wanless had lost the board of directors’ confidence and resigned. The bank also abandoned its offer for Legal & General. Throughout October, NatWest announced cost-cutting plans to eliminate 1,650 jobs and to sell off Ulster Bank, fund management arm Gartmore, NatWest Equity Partners and Greenwich NatWest in the hope of persuading its shareholders to vote against selling out to the Bank of Scotland. 

NatWest’s struggle to remain independent became even more complicated on 1999-11-29, when The Royal Bank of Scotland (RBS) joined the foray and announced its own hostile bid for the embattled bank. Throughout December and January (2000), both Bank of Scotland and RBS jockeyed for shareholders’ support (from both their own and those of NatWest) and raised their respective bids to over GBP 25.6-billion (USD $41.7-billion). In early February, RBS secured a GBP 500-million financing from its own institutional shareholder Spanish banking giant Banco Santander Central Hispano (now Banco Santander). With the additional cash infusion from BSCH, RBS was able to increase the cash portion of its bid for NatWest, and won over the major shareholders of NatWest. 

On 2000-02-11, NatWest finally gave up its fight and recommended its shareholders to accept the offer from RBS. By this time however, the value of the offer had fallen back to GBP 21.0-billion due to a fall in RBS share prices. What began as a seemingly ordinary takeover bid for Legal & General ended up with NatWest losing its own autonomy. 

Interestingly, both Bank of Scotland and RBS were rather smaller than NatWest. So even RBS in the end "took over" NatWest in a cash-and-share purchase, the former shareholders of NatWest actually ended up owning 62% of the newly-enlarged Royal Bank of Scotland Group, with the former RBS shareholders owning the remaining 38%. Click here to return to the Index page.