CLYDESDALE and Yorkshire banks may be floated on the stock market after their Australian parent’s chief executive revealed yesterday that it was an “absolute priority” to exit the UK.
The move follows a lengthy period of under-performance by the British businesses that has led to shareholder pressure on National Australia Bank (NAB) on its home turf to cut its UK arm adrift. A trade sale or divestment to private equity is also a possibility.
Andrew Thorburn, chief executive of NAB, pictured, made his comments as he unveiled annual group profits down 1.1 per cent at A$5.3 billion (£2.9bn), largely due to A$1.5bn of provisions, including a £420 million hit from the mis-selling of payment protection insurance (PPI) in the UK. In total, NAB UK has run up more than £800m in provisions for mis-selling insurance policies to people who did not need them or were not eligible for.
Thorburn, who took the helm in August, said the company’s clear focus now was on “our Australian and New Zealand franchises [which] are in good shape”.
He said: “We have an intention to exit the UK, we think there’s an opportunity now that probably wasn’t there before.
“What we are signalling is that’s our intent, it is an absolute priority.”
He confirmed that NAB was “examining a broad range of options including those provided by public markets”.
However, some City banking analysts said yesterday it was not clearcut how successful a float of the group’s UK business would be in the current climate. The TSB market spinoff from Lloyds got away smoothly last summer, but Virgin Money and Aldermore have been forced to delay public listings because of recent stock market volatility.
It came as Clydesdale and Yorkshire banks announced underlying profits rose 7 per cent to £283m in the financial year to end-September, as bad debts fell by nearly half, or £78m, to £80m.
NAB paid £420m for Clydesdale Bank in 1987 and £900m for Yorkshire Bank three years later. NAB UK chief executive David Thorburn said yesterday that the parent group’s public decision to divest the UK business was “very energising for me and my team”, and denied that it had hit the morale of frontline staff.
David Thorburn said: “I think it’s a very positive development for the organisation. There has been speculation for many years about NAB’s ownership. He [Andrew Thorburn] has now clarified what the future holds.”
He said he expected to be involved in any talks with buyers if the UK assets went in a trade sale rather than being floated on the stock market.
“Clydesdale and Yorkshire Banks are strong brands with good market shares in the communities in which we operate,” the UK boss said.
David Thorburn said the better conditions for a divestment of the UK business that his boss had alluded to included the improved underlying performance of NAB UK, a strengthening of the British economy, and a more conducive financial markets backdrop even with the short-term volatility.
NAB UK has some 4,000 staff in Scotland and 165 Clydesdale branches. Yorkshire Bank has 3,200 employees and nearly 130 branches.
The group declined to put any timescale on a possible float or sale of the assets. NAB has already offloaded a minority stake in its US division, Great Western Bancorp, through a public offering of shares.