Bank of Scotland PLC said it will squeeze cost savings of $1.7 billion per year from National Westminster Bank PLC if its hostile bid for the U.K.'s third-largest bank succeeds.

Bank of Scotland, which last month offered $36 billion for Natwest, said it would shed jobs, sell property, cut overlapping operations, and combine the two companies' computer systems. Scotland's second-largest bank has reduced its own expenses, producing a cost-income ratio of 48%, compared with Natwest's 65%.

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