It also plans to make further cuts at its head office and strip out layers of management to reduce costs and speed up decision-making.
NatWest shares closed 10p higher at 1387p yesterday though this was before talk of a raised bid surfaced Bank of Scotland shares were 5p higher at 748.5p.. Its decision is not expected until early next year.
Bank of Scotland has said it could achieve cost savings of £1bn through the merger of its own operations with those of NatWest. In its defence NatWest has said it would sell four businesses including Gartmore asset management and Ulster Bank. This seems to be a case of yet more lead in Mr Burt’s foot,” a spokesman said
Analysts commented that if Bank of Scotland did raise its bid it would need to leave itself headroom for a further increase in case RBS decides to launch a counter bid.

RBS does not have to make its mind up until the Office of Fair Trading rules on the bid battle. But NatWest said the leak of the discussions was embarrassing for Bank of Scotland and went on the offensive against Bank of Scotland’s chief executive, Peter Burt. “Bank of Scotland appears to be struggling to get its act together. Bank of Scotland’s existing bid was launched in September and offers 1.6 Bank of Scotland shares and a loan note worth 120p, valuing NatWest at £13.18 per share Bank of Scotland declined to comment on its intentions.

“They [Bank of Scotland] might be testing the water to see how the market will react,” one said. Bank of Scotland is keen to raise the pressure on its target, as its arch rival, Royal Bank of Scotland is keeping its options open on a bid for NatWest itself.
However, banking analysts questioned whether Bank of Scotland would raise its existing £22bn bid to £15 per share given that Royal Bank has suggested it would be willing to offer £16 per share. An increased bid would take the offer closer to the level City fund managers feel would be required to stand a chance of succeeding. Market speculation claimed that Bank of Scotland met with Salomon Smith Barney, Credit Suisse First Boston and Morgan Stanley yesterday regarding the underwriting of an additional £2.5bn of capital to back an increase in its takeover bid.
Credit Suisse First Boston’s Mark Seligman and Morgan Stanley’s Michael Tory, both of whom are advisers to Bank of Scotland, were apparently involved in the discussions which were chaired by Salomon Smith Barney investment banker David White Mr Seligman would not comment on the discussions Mr White and Mr Tory were not able to comment either. Bank of Scotland was yesterday believed to be in discussions with investment bankers over ways of raising extra funding to launch an increased hostile bid for National Westminster Bank.

City sources said that the increased bid could be pitched £15 per share, valuing NatWest at £24.5bn.

Bank of Scotland was yesterday believed to be in discussions with investment bankers over ways of raising extra funding to launch an increased hostile bid for National Westminster Bank. The group said retailers are increasingly leaving orders to the last minute to avoid being left with unsold stock.. Reporting a 40 per cent slump in first half profits to pounds 253,000, Hornby blamed the weak UK market for its problems with sales between July and September. Sir John, who is currently chairman of Kingfisher, the retail group, and Tarmac, the building materials company, will succeed Whitbread’s current chairman, Sir Michael Angus, following the group’s annual general meeting next year.Hornby profits fall by 40 per centHORNBY, the model train maker, has been shunted into the sidings by a slowdown in retail orders and weak sales of children’s train sets and its Scalextric range. Mr Glass, who had been criticised in the City for his handling of the company, was on a two year contract and is in line to receive a pay-off of up to pounds 728,000.Whitbread names next chairmanWHITBREAD, the UK brewing and leisure group, yesterday named Sir John Banham as its next chairman. The company has appointed David Clapham, a former Sainsbury’s director, as managing director.