The authorities in Amsterdam have redefined the Dutch auction. The traditional method of gradually lowering the price of an asset until a bidder is flushed out gained currency during the 17th-century tulip bulb mania.

Today’s auction of ABN Amro is following a very different pattern. Dutch regulators, ministers and media do not want their second-biggest financial institution to be dismembered and are setting the ground rules accordingly. If the Royal Bank of Scotland consortium cannot convince the Dutch central bank that their break-up is an acceptable risk, the Dutch auction will not be an auction at all.

Yesterday’s robust statement from De Nederlandsche Bank is a healthy reminder of the difficulties RBS faces. For a central bank statement, it was extraordinarily blunt and unambiguous. It contrasted strongly with the response to the Barclays approach, which was not deemed to require any statement at all.

DNB has a point. Banks are different. They owe their existence and success to regulators who instil confidence in their balance sheets and ultimately underwrite their deposits. They cannot be sliced, diced and filleted at the whim of the owners. Some central bankers are worried that the break-up of a reasonably healthy bank such as ABN would set a dangerous precedent.

But the timing of the DNB statement may be premature. RBS and co may yet be able to structure a deal in a way that can reassure supervisors.

The Bank of Spain Governor’s riposte to his Dutch counterparts also looks intemperate, perhaps too willing to see things from the point of view of Banco Santander, another bank in the RBS consortium. Both central banks risk being seen as partial and protectionist by publicly commenting when there are still no proposals on the table.

The tide, which some here thought was moving away from Barclays this week, is now heading back in its favour. Politics as much as price will determine this bid battle, and Barclays has played a good game, by starting to woo the Dutch years ago and by making big promises on domicile. It will, of course, have to live with the consequences.

Goldman Sachs looks like a good leading indicator here. It sacrificed the chance of a big bidder’s mandate advising RBS in favour of a smaller but more certain fee in order to advise ABN on defence. On the strength of yesterday’s events, that was a smart call.

Nicoli finally faces up to reality

Eric Nicoli, the chief executive of EMI, should have resigned long ago. He was the executive chairman who fired, hired and fired management in recorded music, but did not take responsibility for the business during their tenure. Instead, he took their jobs. At the same time, he has been at the helm as five different attempts to sell the company have fallen over. Not all of them have been his fault, but he has emerged as a jinxed seller of the business.

Unfairly for Mr Nicoli, the climate continues to batter his reputation. The continuing collapse of recorded music means that he has become a serial dispenser of profits warnings. These are not his fault. This is the reality of a physical business being undone by downloads more quickly than the new digital market can replace lost revenue. In fact, Mr Nicoli has taken the lead in addressing this problem head on, partnering the most powerful brand in online music: Apple. Likewise, Mr Nicoli has borrowed the business plan of private equity to shore up the future finances of the company. The announcement yesterday that the company will securitise the future earnings stream from its highly profitable music publishing business is not only sensible. It stands as another example of how companies can realise value promised by private equity but in public ownership. Yesterday, he scrapped the dividend. Again, he was probably right to do this. Borrowings would not have permitted a pay-out, simply for pride’s sake.

Mr Nicoli, the chief executive, is addressing some of the problems that Mr Nicoli, the executive chairman, allowed to build up over the years. They were, though, his responsibility then. And they have resulted in the fact that a once great British company can no longer afford to pay a dividend.

Rising menace

According to Tuesday’s letter from Mervyn King to Gordon Brown, pay growth is one potential inflation risk that at the time of the Bank’s February Inflation Report had not yet materialised.

Yesterday’s new earnings figures suggest that it has now.

Pay is a key piece of evidence on inflation. The labour market is the means to transmit price rises into an inflationary spiral. And earnings are a key factor in consumer spending in an economy that is already up against capacity limits and sucking in imports to fulfil excess demand.

As so often with statistics, hawks and doves can pick and choose to suit their personal likes. Excluding bonuses, pay growth has been remarkably stable over the past two years, no cause for worry. If bonuses are included, however, a different story emerges.

Pay in the private sector is accelerating and, in the bonus season, rose at annual rates above 5 per cent, well into the territory that used to cause the Bank of England worry. In private services, pay growth averaged almost 6 per cent in the first two months of 2007.

Bonuses can fall as well as rise: the City boom will not last for ever. But they feature in all sorts of private sector pay packages and are as likely to boost consumer spending as guaranteed pay, albeit mainly in the rich South.

Only complacent members of the Monetary Policy Committee will still choose to play down pay inflation.

Blackout

The BlackBerry service shut down yesterday across much of North America. Research in Motion, the company that runs the system, could not immediately explain why, but e-mail junkies — those who suffer from the CrackBerry addiction — did not know what to do with themselves, let alone their idle thumbs.

Was a higher power at work? Was there greater Meaning here? Was this a reminder, perhaps, to BlackBerry-users who hunch over their devices, twitching at every incoming message and thumbing back their unfiltered thoughts in bad prose, that they should switch off their machines once in a while, talk to the occasional cab driver or, simply, stop and think?

Or was it just a technical malfunction that will play to the advantage of competitors like Motorola and Nokia and underline the fact that RIM, the market leader, cannot afford a moment’s rest?

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive