The battle for ownership of Scotland's largest bank is already sparking lively controversy about the rights and wrongs of overseas control of banks in Britain.
The target of rival bids -- one of them the biggest in British industrial history -- is the prestigious Royal Bank of Scotland, which accounts for half of Scottish banking and stands No. 5 among banks operating in England.
The first bid -- of L310 million ($682 million) -- came from the Standard Chartered Bank, Britain's biggest overseas banking group. If Standard Chartered succeeds in taking over the Royal, the combined enterprise will become one of the most powerful banking organizations in Britain. The Royal's management had already advised acceptance of the Standard Chartered offer when a blockbuster bid of L500 million ($1.1 billion) arrived from the Hong Kong & Shanghai Banking Corporation.
On the face of it, the new offer looks attractive enough to be impossible for shareholders to resist. The trouble is that the bidder, with more than 800 offices in 45 countries, is based in Hong Kong. Not only Scottish but also English bankers and politicians are asking whether control of the Royal Bank of Scotland and its subsidiaries by such a huge overseas concern is in the national interest.
The new offer for the Royal is a record bid in British company history. It immediately began to push up the Royal's shares, already buoyant after the initial Standard Chartered bid.
But prominent figures in the British banking world are urging the Bank of England to look with disfavor on the proposed deal. There have also been strong calls for referring the deal to the monopolies commission.
The Royal Bank of Scotland is Scotland's premier bank, incorporated by royal charter in 1727. The Hong Kong bank is one of the world's top 40 international banks. It operates widely in Asia, the Middle East, and North America.
Launching its bid, which is accompanied by a generous cash offer to shareholders prepared to support it, the bank said that although it operates from Hong Kong, the colony itself is ruled directly from London. This, it argues, makes the point about overseas ownership irrelevant.
But in Scotland, and in Threadneedle Street at the Bank of England, that argument is not making much headway. The case for the Hong Kong bid to be subjected to minute scrutiny appears strong, and when it comes to friends, Standard Chartered can probably count more in London than can the Hong Kong bank.
A battle royal for ownership of the Royal Bank of Scotland seems inevitable, with the odds slightly tipped in the early bidder's favor, despite the lower figure being proposed to shareholders by Stan dard Chartered.