TUESDAY 8th FEBRUARY 2000; Those In Favour of Bank of Scotland...

We produce a monthly Group Purchasing Newsletter, wittily called "Purchasing Matters," and edited by an old friend and colleague of mine from D&B days. Last month I set a competition, illustrated by a couple of my own examples, asking people to write a spoof film review based on the happenings of the last few months.

We only have three entrants, but TC (with a bit of help from his boss in the pub one night, I believe) demonstrates a real comedy talent and walks off with the valuable first prize- surprisingly, aTony Bennett CD.

Philips and Drew Fund Management have announced that they will back Bank of Scotland. They own 2.3°/o of our shares, so are the largest shareholder to declare so far. They are also large holders of BoS shares, so they are demonstrating continuing support for the BoS management team. Prospects of a split vote seem therefore to be increasing a little, although whether this will save us is doubtful.

Our shares are now at a significant 20% discount to the bid value; does this mean the market think we will escape? Or that whoever wins will immediately see a drop in their share price and hence the value of the bid? Better brains than mine have struggled to understand the share price movements during this whole period. A random walk (the drunken spider theory) seems the best explanation.

The FT Lex column, which, unlike the rest of the paper, has been against us from the start, says that we should not be allowed to escape. Our strategy is "a recipe for managed decline." We have lacklustre promises on growth and lack a complete management team. Choosing between the Scots is tricky, but BoS has more focus on core banking, which is NatWest's problem, and is perhaps more efficient. Go for BoS, Lex recommends.