Natwest, with No Takers at $4B, May Offer U.S. Unit Piecemeal

block, London-based National Westminster Bank PLC has failed to find a taker, and it is now considering unloading the bank in pieces. Sources familiar with the negotiations said bidders did not come close to Natwest's price tag of at least $4 billion in cash for the $32 billion- asset unit. As a result, the bank will likely seek buyers for its parts after the new year. "Negotiations are continuing," said a spokesman for the bank. "There still are a number of parties interested. ... The process always takes a while." In a statement released last week to employees of the U.S. bank, National Westminster Bancorp, its top executive said he had no "concrete information" about the state of negotiations. "The simple fact is ... there is no news to report," said John Tugwell, chairman and chief executive. "As you know, it's difficult to state accurately when an announcement might be forthcoming, since this is a highly complex process." Sources said that although several bids had been submitted from potential buyers in November, none had come close to matching the $4 billion to $6 billion that National Westminster is reportedly seeking. Chances for the bank to do a quick deal now appear to be increasingly remote, these sources added. Natwest made the decision to sell after a handful of large merger deals in New Jersey garnered high prices. However, the bank did not anticipate the rash of transactions that completely changed the industry landscape, like the subsequent agreement to merge between Summit Bank and UJB Financial. "You look at the landscape now and everybody is preoccupied," said one investment banker, who is close to the situation. "As a result they (Natwest) will sell it in pieces. Goldman has already been soliciting banks interested in participating in a breakup." Goldman Sachs & Co. is representing National Westminster. "In my personal opinion, it will be some time before there is any announcement," predicted Ray Soifer, a banking analyst with Brown Brothers Harriman Inc. Among the banks that have reportedly considered acquiring the unit are HSBC Holdings PLC, Fleet Financial Group, Bank of New York Co., and First Union Corp. Elizabeth A. Summers, a banking analyst with Ryan, Beck & Co., said the two-times-book that Natwest is after is not exorbitant. But she added that a foreign buyer remains the most likely candidate because the cash deal Natwest wants would pose a major problem for a U.S. institution. A cash transaction would create a large amount of goodwill that would have to be written off against earnings, she said. "Natwest has two alternatives - either they get the price they want or they do multiple deals," Ms. Summers said. Selling off the bank in pieces, she asserted, would make it far easier for U.S. buyers because of the lower amounts involved. Some analysts warned that the longer the negotiations drag on, the more problems it could pose for Natwest. "They're in a hard position now," said one analyst, who declined to be identified. "They could see the value of their franchise erode if they don't find a buyer."