WEDNESDAY 8th DECEMBER 1999: One Day, We'll be Millionaires

I present the case for Redgrave (setting up with Andersen Consulting a purchasing jv that can sell services to other businesses) to Ron Sandler, with Bernard, Jim and Mark Fisher in attendance. I try to present a positive but balanced case - I have my own doubts, but I am trying to be objective. Ron is not as keen as I have been led to expect. He is worried (quite rightly) about how savings will be measured, and Andersen rewarded. He tells me we shouldn't get over excited about floating and making our personal fortunes from this (which of course had crossed my mind!)

He wants to go to the "Letter of Commitment" stage, which is not contractually binding but implies serious interest, but he wants me to present the concept to the Executive Committee tomorrow. I said I wasn't over keen about presenting to that group if he was not enthusiastic - he said enthusiasm had to be earned when he had more evidence. He is clearly very bright but he is not exactly Mr. Motivation this morning, and I leave feeling somewhat down generally and less positive about Redgrave.

BoS make a presentation to analysts and press. They emphasise their efficiency, compared to NatWest and Royal Bank, and their focus on core UK banking. They have been planning this for a considerable time; have management strength in depth, and a tried and tested operating model. They have a "Can Do" culture, which sounds a bit American rather than Scottish. They justify the cost saving estimates in more detail and describe a three to four-year plan for IT integration.

The covering letter from their Chairman leaves the door open for further constructive discussion- it looks like they are backing off from the initial very hostile approach slightly, perhaps because they feel RBS have outflanked them by making a friendlier approach- but with equally aggressive cost savings. There doesn't seem to be anything very new, but the restatement of their efficiency compared to ours (even if the comparisons are arguably unfair) is quite powerful and comes back to one of the fundamentals of this whole process; which management team will the shareholders trust to deliver future value?

We immediately respond, picking up in particular on what is described as a "U-turn on IT". They have pulled back from their initial plans to migrate NW software quickly and are now talking in a somewhat more vague way about efficiency drives without a clear migration path. They also hardly mentioned Corporate or Private Banking or Treasury, which emphasises their lack of experience in these key areas.