Banking on basics
NATWEST has made its mistakes but at least they stopped short of Crocker. This was the Californian bank bought by the Midland on the principles of me-too and here-comes-my-big-deal. That one cost the Midland its independent existence. Now, after buying all sorts of businesses all round the world, the High Street banks find that their most profitable business is the one they started with. Borrowing money cheap- ly and lending it out more expensively is
scarcely a novel idea, but it has been coin- ing money for them, and has let them earn 20 or 30 per cent on their capital. Either this business is not as good as it looks or somebody will try to take if off them, but it hasn't happened yet. NatWest has its own breed of tough commercial bankers who know their own business thoroughly but flounder when they get into other people's, and their distractions have left them with some catching up to do. At the same time, Derek Wanless, NatWest's chief executive, has been looking for a deal which could cut costs but, beyond that, bring together a good spread of strong brands in major mar- kets. Hence the passes that NatWest made at Abbey National and the Prudential, and now at Legal & General. For £10 billion, this one has got to be right.
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