ROYAL Bank of Scotland yesterday gave the clearest signal yet that it may bid for NatWest as speculation rose of a joint approach with Spanish associate BSCH.

Royal Bank, widely expected to trump arch-rival Bank of Scotland's £22 billion sterling ($36 billion) hostile bid for National Westminster Bank, said it was submitting a "merger notice" to Britain's Office of Fair Trading.

The Edinburgh-based bank said it was contemplating a merger and keeping a full range of options open, adding that the move should not be taken as evidence of a decision whether or not to make an offer for NatWest.

A joint approach by Royal Bank and BSCH would represent the first significant tie-up between a European and a British bank.