NAB mulls flotation of UK assets if RBS bid fails

Published on Sunday 11 April 2010 23:14

NATIONAL Australia Bank is understood to be weighing a possible £2 billion flotation of its Clydesdale and Yorkshire bank operations in the UK as it battles for 318 branches being sold by Royal Bank of Scotland.

The banking group is one of a string of bidders including Virgin, Santander and the Wellcome Trust to have submitted offers for the former Williams & Glyn's branch network which RBS is being forced to sell off to comply with European competition rules.

If NAB is successful, it would almost double the number of branches operated by the Australian group in the UK.

But it is thought that if it lost out, NAB would look to float or dispose of its UK operations.

Advisers from Morgan Stanley and Goldman Sachs are said to be looking at the flotation option as part of a wider review being conducted as the UK banking sector undergoes a major shake-up.

The future of NAB's UK businesses, which account for 17 per cent of the group, have been the subject of speculation in recent years. Although the group has at times shown desire to expand in the UK through acquisition, it has also thought to have been open to offers for the operations.

In February, group chief executive Cameron Clyne said the bank would "monitor market developments in the UK".

He had earlier revealed that NAB had received approaches from "a number of players in the UK market to see how we could work with them", a comment seen as suggesting offers had been made to acquire the Glasgow-based Clydesdale and the Yorkshire operations.

At a presentation he gave to the Asian Investment Conference last month, Clyne said the outlook for the UK economy was mixed.

In February, Clydesdale said it was on track for its goal of 10bn in gross new lending to businesses and mortgage in the next two years.

Meanwhile, Metro Bank, the new high street finance firm being launched in the UK by US tycoon Vernon Hill, has said that it plans to float on the London market within three years.

The group is about to open its first two branches in London and believes its network could grow to some 200 within a decade.

Metro Bank is set to be the first of a wave of new institutions looking to enter the banking market over the next few years, opening up a sector that has shrunk vastly since the financial crisis. Virgin Money is also waiting in the wings, with Tesco tipped to launch a full banking operation within a year or two.

Metro has appointed several City heavyweights to its board including former Tory party deputy chairman Howard Flight.