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World Business Archive
Broadcast 25th February 2000

National Westminster Bank has lost its fight for independence after shareholders accepted a take-over offer from a smaller bank, the Royal Bank of Scotland.

The Scots pounced on an institution that had become a shadow of its former self. In the 1970s, NatWest really didn't know what to do with all those huge profits from ordinary Britons' bank accounts. The bank built the tallest office block in London - the NatWest Tower, It set up branches across the globe and moved into the risky world of stock market trading and investment banking.

George Trefghane of the Daily Telegraph newspaper in London, told us about the culture at NatWest:

"NatWest has traditionally been probably the most slow-moving of the big High Street banks: very bureaucratic, very traditional, very grand, with an atmosphere a bit like the Civil Service - a very gentle, civilised place. Their head office is an art gallery. It's currently showing a modern art exhibition. They have always been quite generous to their staff. In fact, the board has managed to accumulate four knighthoods and two peerages between them."

But it wasn't just red tape and bureaucracy that caused NatWest's downfall.... the management packed with peerages just didn't have the expertise to move outside what it already knew.

"The other one of its downfalls was a series of disastrous forays outside its core retail banking business - into investment banking in America; they tried to set up a retail bank in America. They bought something called Hambro Megan, which is a small corporate advisory outfit. They spent $100 million on that and then they decided that was no good. They had NatWest's market, which is an investment bank in the UK. And that had a £85 million blibrary discovered in 1996."

They suddenly found that the traditional gentlemanly insitution was incapable of dealing with these very new businesses. George Trefghane
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