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  • Peter Smith

Monday 11th October 1999: Rowlands and Sandler Show Confidence

The NatWest offer for Legal & General formally lapses today; there is not really any way it can be pursued given the current situation. Their shares have dropped back to around 170p, compared to our bid of 210p.


I am invited to a "top 100" type get together in the Gibson Hall. Sir David starts with a stirring call to arms. We haven't lived up to our potential. We have amazing people and potential, but NatWest has been stuck in a time warp and now is the moment to get out of that and get moving. We have to be responsible, but we must look at the future more aggressively. We should see the bid as positive- we probably needed a shock to break out of old patterns of behaviour.


Then he moves on to the story of the bid. In retrospect, he misjudged both the investor reaction to our L&G proposal, and the amount of antagonism towards NW. The day of the BoS bid, he had just got up and was preparing for his morning run when the phone went.

"Hello, we don’t know each other, this is the Governor of the Bank of Scotland." Various thoughts came to mind at that point, but quickly he realised the truth as The Governor, otherwise known as Sir Jack Shaw (whom David does not know) explained they were about to bid.


In terms of the bid, some of their comments about NW are fair. But the synergy claims in particular are fairy stories. In response, we have to understand and assess what we're worth as a business. We have a duty to shareholders to do that, both so we can properly consider the BoS bid, and so we can look at any other approaches. But this is not just a theoretical exercise prior to selling out; he really believes we can run this business ourselves as well as anyone. Our people and businesses are certainly just as good as Bank of Scotland's. Sometimes it needs a crisis like this to bring people together - he really believes we can come through this. We are waiting for the BoS offer document this week, then we will have 14 days to make our first response.


The message about Derek Wanless is much the same as I heard on Friday. He was too associated with past failures. Derek and Sir David were already discussing Ron joining as Derek's number two. Then he introduces Ron.


Ron tells us that he is very excited (although he is clearly not a man to show that too overtly) but has no profound thoughts to give us as yet. He felt during his time at Lloyds that he was one step away from a revolution in financial services and wanted to be more closely involved. This is that opportunity. Change is inevitable but he is confident we can get through this period and then there are very exciting opportunities. New reporting lines will be announced tomorrow.


Questions from the floor cover costs - we have to be very prudent but mustn't damage the future - the likelihood of other bids, and likely customer reaction. These last two get a "don't know" response.


Well, I really wouldn't want to put money on the outcome of this, but you feel that (despite Sir David's perfect accent and manners) you would probably rather have him or Ron on your side in a bare-knuckle fight than Derek. There is an air of clarity and ruthlessness about them both that has been somewhat lacking in the NW top team over the last couple of years.


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