Industry sources said the boards of both companies would meet at the weekend to give final approval to a recommended cash and stock offer, worth 210 pence a share.

The deal would create a powerful new financial services group with a market value of some 30 billion pounds. It would twin the extensive branch network and 6.5 million personal account holders of NatWest, one of Britain's `big four' retail banks, with L&G's high-profile and low-cost savings products.

The planned price represents a 20-per cent premium to L&G's share price on Wednesday. Shares in the 163-year-old company surged 10 per cent on Thursday in heavy volume of 41.7 million to 192-1/4 pence on rumours that a bid was imminent.