I spend most of the day writing this "strong pitch" for our procurement jv with help from one of my senior guys and T from Jim Mann's team. He s a bright guy but tends to get lumbered with too many difficult or no-win projects. He is supposed to be doing this Redgrave paper but is snowed under trying to sell off a couple of our e-commerce ventures as quickly as possible to strengthen the defence case- demonstrating our pro-activeness, that sort of thing.
Unfortunately, and despite the current e-everything frenzy, we literally cannot give one of these businesses away. It has absorbed significant investment, which perhaps demonstrates a NatWest problem; continuing to provide high-cost medical treatment for lame ducks long after their necks should have been wrung. After several drafts and much discussion, I think we have a decent paper to put before Richard and others as the final selling attempt on Redgrave. I think on balance it is worth pursuing as an idea. In particular, I think the opportunity to go after third-party business is real and quite exciting.
We issue a stock exchange announcement in response to yesterday's BoS comments on mergers. We agree that there can be sense in consolidation, but BoS have only used two examples while we quoted 11; and anyway, their examples are both very different from this case. Compared to Lloyds and TSB, there is less overlap of the businesses here, the bid is hostile and hence integration plans have not been jointly developed, and cost savings claimed by BoS (and indeed RBS) are way above the Lloyds achievement. Sir David says that "Bank of Scotland has implicitly recognised the strength of our arguments that bank mergers destroy value...", which I don't quite understand, but it is a strong rebuttal none the less. I believe this message about risk and previous evidence being mixed at least has actually got through, and if we do survive will probably have been the key element.