The merger of The Royal Bank of Scotland (RBS) and
National Westminster Bank (Nat West) as well as other major British banks including Barclays and Woolwich Building Society
has created major economical and social interest boasting scholarly debate (Papers4you.com, 2006). It is important to understand
why such mergers take place and the potential gains of doing so.
The RBS and Nat West merger was formed in delivering
Nat West from inefficiencies of poor services originally formulated from the merger bid proposed by the Bank of Scotland.
Nat West will benefit from the forward thinking impact present at the RBS Group. The entrepreneurial spirit will help the
bank as well as the whole merger to move forwards in a highly competitive market simultaneously maximising customer satisfaction
- a major key to survival in this industry. Impact on shareholders during the merger or discussion process can vary bringing
about instability and lack of confidence.
Following the completion of the RBS £20.8 billion
bid; share yields rose in price to an attractive level in line with the UK economy thereby portraying the strength
of the merger. In essence the driving force behind the success of the RBS bid over the Royal Bank of Scotland was in fact the higher share price expectations offering the perfect icing.
There are many foreseeable benefits of merging to
create a larger customer base, maintaining market power and ultimately reducing risk (Papers4you.com, 2006). However, in the
reshuffling process redundancies and unemployment are highly evident. A BBC News article revealed that the RBS hopes to achieve
efficient operation by cutting costs by £1 billion thereby threatening 18,000 Nat West Employees (Friday, 11 February, 2000).
Nevertheless, employee downsizing moves with the financial services market where the shift from branch based services to E-commerce
in terms of internet and telephone banking services. Henceforth, new areas of employment are created accommodating an advancing
system thereby giving scope to major economies of scale. Thus the merger boasts upon innovation and development where further
employees will be trained to the highest standards to deliver customer services and knowledge of products achieving greater
Today the RBS and Nat West group are growing from
strength to strength with worldwide status and second largest market capitalisation within Europe.
The rise of this super bank portrays the positive impact of combating competition and placing the consumer at the heart of
Anderton, A (2001) Economics Third Edition, Causeway
BBC News Articles;
Thursday, 27 January, 2000, ‘Bank of Scotland:
bold move by UK's oldest bank’ http://news.bbc.co.uk/1/hi/business/621123.sm
Friday, 11 February, 2000, ‘Nat West merger's
mixed fortunes’ http://news.bbc.co.uk/1/hi/business/639201.stm
Monday, 7 February, 2000, ‘Banking on size
to compete’ http://news.bbc.co.uk/1/hi/business/ the_company_file/456551.stm
Papers For You (2006) "P/F/125. Master's Dissertation.
UK Banks' Merger: Evidence from 1995-2001 Period", Available from http://www.coursework4you.co.uk/sprtfina33.htm [17/06/2006]
Papers For You (2006) "P/F/73. Synergy from the
Mergers and Acquisitions: cases of two real mergers (Royal Bank of Scotland
and NatWest; Barclays Bank and the Woolwich)", Available from http://www.coursework4you.co.uk/sprtfina33.htm [18/06/2006]