NatWest on Friday rejected the Edinburgh-based bank's bid, worth 22 billion pounds ($36 billion) at the market close, saying Bank of Scotland was trying to buy it "on the cheap".

But many analysts believe NatWest's days as an independent bank are numbered. Its only real options may be to find a third party "white knight" bidder or persuade Bank of Scotland -- which is just half its size - to pay more in exchange for a recommendation from the board.

Potential counter-bidders include Royal Bank of Scotland, Bank of Scotland's arch-rival which earlier this year signalled its acquisitive ambitions when it considered buying Barclays Plc.

A RBS spokesman confirmed onFriday that it had been looking at the position of NatWest for some time and was watching the situation very carefully.Britain's biggest banks, like Lloyds TSB Group Plc and Barclays, would probably be ruled out from bidding for NatWest on competition grounds.

But a merger with a mortgage bank like Abbey National or Halifax could be on the cards. However, industry sources said market rumours that NatWest was already negotiating a deal with Halifax were wide of the mark.

Foreign banks, too, are likely to be running their slide rules over NatWest."Every corporate finance team in the world will be saying to every bank in the world 'come on, this is a one-in-a-lifetime opportunity'," said Robert Fleming banking analyst Hugh Pye.

Bank of Scotland stunned and delighted the market with its David-and-Goliath bid on Friday which NatWest shareholders much preferred to a proposed 10.7 billion pound acquisition of insurer Legal & General Plc.

The Scottish bank promised to focus on the core banking business andsaid it would slash costs, with branch floor space set to be cut by 50 percent.NatWest shares have under performed the sector by some 20 percent over the last five years following a series of mishaps, including an unsuccessful foray into investment banking.

But they stormed 30 percent higher to 13.54 pounds on Friday, above the Bank of Scotland offer price, amid talk that a higher offer could emerge.NatWest had a market value of 17.7 billion pounds on Thursday -- the day before the bid was announced -- against Bank of Scotland's 8.9 billion.Bank of Scotland's offer is 1.6 New Bank of Scotland shares and 1.20 pounds nominal amounts of loan notes per NatWest share.

Under the planned takeover, several NatWest businesses would be sold, including fund manager Gartmore, Ulster Bank and investment banking arm Greenwich NatWest.