National Westminster Bank Group's U.S. bank is struggling with a mountain of bad real estate loans, but after only two marginally profitable quarters, it is ready to do deals.

In an employee newsletter last month, the U.S. bank's chairman and chief executive, John Tugwell, said NatWest is on the verge of a deal to buy branch offices in New York and New Jersey. "We have, in fact, signed the letter of intent signifying that we...are seriously pursuing this transaction,"he wrote.

What's more, he added NatWest will continue to acquire branches or banks "aggressively, though sensibly and cautiously."

Said a skeptical analyst, who refused to speak for attribution: "They bought a bunch of banks in New Jersey [in the late 1980s], and they turned into mini-Midlantics. Good luck, buddy."

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