If Royal Bank of Scotland wins the bidding battle to acquire London-based National Westminster Bank PLC, the U.S. banking community is likely to face a more daunting competitor than if Bank of Scotland wins the prize or if Natwest remains independent.
Unlike the others, Royal Bank has displayed keen interest in the U.S. retail market and already owns Citizens Financial Group, a $23 billion-asset banking company based in Providence, R.I.
Analysts said that with Natwest's heft behind it, Royal Bank would be well positioned to acquire a large U.S. bank.
It already has agreed to two fairly large acquisitions since June. On Oct. 1, Royal bought a $2.7 billion commercial banking business from Boston's State Street Corp. And in June it agreed to buy Boston-based UST Corp., which has $5.9 billion of assets and 87 branches.
Beyond that, Royal tried to create a joint venture bank this year with the evangelist Pat Robertson to target his followers. That deal failed as a result of public criticism of the bank's linking up with Mr. Robertson.
George Mathewson, Royal Bank's chief executive officer, has repeatedly stated that he intends to keep Citizens and expand in the United States.
"This would definitely strengthen their U.S. presence, " said Katrina Blecher, a banking analyst with Brown Brothers Harriman & Co., New York. "It would enhance both their size and product range."
On the other hand, analysts said that if Natwest remains independent or is acquired by Bank of Scotland, there is little likelihood that the company would substantially boost its activities in the United States.
A spokeswoman for Natwest said Monday that the bank had no intention "of increasing or decreasing its U.S. corporate assets," which amount to $17 billion.
Natwest has had a long and unhappy history in the United States. It embarked on several major retail acquisitions in the 1980's only to find itself forced to pump in hundreds of millions of dollars in fresh capital to cover bad real estate and commercial loans during the recession of the late 1980s and early 1990s. That unit, Natwest Bancorp, was sold to Fleet Financial Corp in 1996 for slightly over $3 billion, far less than the $4 billion to $6 billion Natwest had hoped to get.
The U.K. bank subsequently attempted to build an equity-driven business under Natwest Markets, only to fold that operation. It still retains some $17 billion in money market funds, commercial loans, and other U.S. assets booked through the New York branch.
Bank of Scotland's presence in the United States is modest, and the company has shown no interest in expanding here other than through private banking. It has slightly more than $1 billion of assets in the United States, and has not given any indication of what it plans to do with Natwest's $17 billion-asset wholesale banking operation.
All three banks, including Natwest, say they plan to sell Natwest's Greenwich Capital Markets Inc., a primary dealer in U.S. government bonds which also handles asset securitization, structured finance, derivatives, and fixed-income underwriting, distribution and trading. Sources said most of its activities are concentrated in bond trading for customers as well as its own account.
Created out of a combination of the operations of Greenwich Capital Markets Inc and other U.S. units of Natwest in March 1998, Greenwich Capital - based in Greenwich, Conn. - has 1,770 employees worldwide, including 700 in the United States. It also has offices in London and Tokyo. The unit generated a 14% annual rate of return on equity, or $160 million in net earnings, in the first half this year, Greenwich Capital reported.
On the other hand, the three banks were unanimous that the New York arm of Natwest's private banking operation, Coutts & Co., would be kept.
Bidding intensified Monday as Royal Bank formally entered the fray, as had been widely expected. It announced it would pay $42 billion for Natwest. 
