Natwest Regroups Top Execs to Fend Off Takeover

In its latest move to defend itself from an unsolicited takeover bid by Bank of Scotland, National Westminster Bank PLC on Friday announced a major overhaul of its top management team.

The $302.7 billion-asset banking company, which is based in London, said chief executive officer Sir Derek Wanless has been succeeded by Sir David Rowland, who is now group chief executive as well as group chairman.

In addition, the company said it named Ron Sandler, the former chief executive of Lloyd's of London, as director and chief operating officer.

Bank of Scotland, which announced its $34 billion unsolicited offer for Natwest last month, has highlighted its own management's success in achieving cost savings.

Natwest's Sir Derek had worked at the bank for 32 years and took over as chief executive in March 1992. His last day was Thursday, said Natwest spokesman Stephen Colton, who added that Sir Derek neither resigned nor was fired, but "had come to a mutual agreement with the board."

He will continue as an unpaid consultant to Natwest until Bank of Scotland's bid is completed, Mr. Colton said. Mr. Sandler, who worked at Lloyd's from November 1995 until this past June, is credited with managing the insurer through a difficult reorganization. Sir David was chairman at Lloyd's during Mr. Sandler's tenure there.

Despite Mr. Sandler's strong reputation, analysts doubted that Natwest's management overhaul would stop the Bank of Scotland bid.

If for some reason Bank of Scotland does not succeed in its efforts to acquire Natwest, another company probably would, these analysts added.

"It's a positive for Natwest, since Sir Derek had limited credibility," said Jon Kirk, an analyst at Fox-Pitt Kelton in London. "But it doesn't detract from the possibility of another counterbidder."

The company may be hoping that the shakeup will attract the interest of a white knight, analysts said.

Sir Derek has been seen as resistant to changing his role at the bank if a friendly takeover were to occur.

Royal Bank of Scotland said in late September that it too was considering the situation, and Abbey National Bank PLC has also been reported to be interested in a possible play for Natwest.

"The big issue now for Natwest is to get the best price for the bank," said Peter Thorne, an analyst at Paribas in London. To do that, he said Natwest management would need to effect some of the changes Bank of Scotland has mentioned - such as disposing of non-core business units.

Bank of Scotland may today move a step closer to taking over Natwest. Bank of Scotland had said it would not buy Natwest if Natwest completes its proposed deal to buy U.K. insurer Legal & General. The deal was not well received by Natwest investors, and the bank's share price suffered. The offer is scheduled to lapse today, and Natwest said last week that it would not extend the offer period. Under U.K. takeover law, Natwest would have 14 days to present its defense before the deal goes before bank shareholders for a vote.

Many owners of Natwest stock are likely to be eager for an offer. The management change "is a last ditch effort by Natwest, but it's not really what shareholders want," said Mr. Kirk of Fox-Pitt, Kelton.

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