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BoS and Abbey try conciliation
Bank of Scotland is ready to hold "talks about talks" with its putative merger partner, Abbey National, within the next few days following frantic moves over the weekend aimed at rescuing a deal between the two banks.
Sir John Shaw, BoS's governor, is awaiting a call from his counterpart at Abbey, chairman Lord Tugendhat, who returned from business in Hong Kong on Saturday and who is said to be ready to offer concessions to the Scottish bank's management team in order to restart negotiations.
Informal discussions between Credit Suisse First Boston, BoS's investment bank advisers, and Lehman Brothers, working alongside UBS Warburg for Abbey National, took place on Saturday before Peter Burt, BoS's chief executive, returned from a private trip to New York that evening.
The sides last met on Thursday morning before news of the discussions leaked and BoS subsequently revealed that while it had discussed a merger of equals during the summer, Abbey's more recent suggestion of a full-blown takeover of the Scottish bank was of no interest.
"There are no meetings scheduled, but if they are ready to flesh out their proposals and want to discuss it we would be duty bound to listen," a BoS spokesman said yesterday.
The chance to re-present their case will come as a relief to the Abbey camp, which has been thrown into disarray by the sharp rebuff it received last week from the Scottish bank. But both sides last night conceded that the chances of an amicable deal had deteriorated markedly now that negotiations were being conducted in the full glare of publicity.
"We have had a very public exchange of views. I think most people agree this is not the best way of going about things, sitting in a goldfish bowl," one adviser said.
Abbey was taking a conciliatory line over the weekend, suggesting that since both sides accepted the commercial and strategic logic in bringing the two businesses together, there should now be room to work on issues such as the structure of any transaction and the division of management. "Shareholders in both banks will not let us walk away from this now," one insider said.
But the BoS camp was still insisting it does not "need to do a deal for a deal's sake".
One adviser said: "A nil-premium merger made firm economic sense. But shifting the goal posts - moving from a merger to a takeover - and suddenly there is not much left in it for shareholders. There is not enough to justify a big premium."
It is now widely assumed that Abbey will have to offer a swath of top jobs to BoS executives if it is to stand any chance of success.
Analysts have speculated that if amicable terms cannot be agreed, one or other side might be goaded into a pre-emptive hostile bid. Although both sides played down the prospect last night, Abbey and BoS are acutely aware of potential predators.