Magazine article American Banker

Royal of Scotland Surges on Report HSBC Might Buy

Magazine article American Banker

Royal of Scotland Surges on Report HSBC Might Buy

Article excerpt

Royal Bank of Scotland shares rose sharply on speculation last week that HSBC Holdings PLC may try to buy the Scottish Bank.

Spokeswomen from both banks declined to comment on the speculation, which was fueled by a Financial Times stock-market report.

The newspaper said Friday that a surge in HSBC's share price increased the likelihood the bank would make a large acquisition. A natural target, it said, would be Royal Bank, the worst-performing U.K. bank stock in 1996 and so far in 1997.

"It's the old HSBC's-going-to-buy-it rumor," said Ian Poulter, an analyst with Williams de Broe. "We've heard that one year after year, but whether HSBC would care to pay goodwill at the current share price is another matter."

Royal Bank is seen as an attractive target because it has three basic units-U.K. banking, the Direct Line telephone car insurance business, and Citizens Financial Group in New England-that do not rely on each other. …

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