Clydesdale confident it can escape takeover

Published on Tuesday 26 October 2010 22:06

THE head of Clydesdale Bank and Yorkshire Bank yesterday played down predictions of further consolidation in the sector as her group kept up the pace of organic growth with a 53 per cent jump in annual profits.

Lynne Peacock, chief executive of the UK operations of National Australia Bank, made her comments after Clydesdale and Yorkshire walked away last summer from the auction of more than 300 Royal Bank of Scotland branches.

That bid battle was won by Santander of Spain, which had previously acquired Abbey, Alliance & Leicester and Bradford & Bingley's deposits arm. There has been speculation that Clydesdale and Yorkshire might be next in its sights.

Peacock, who revealed Clydesdale and Yorkshire's retail deposits jumped 11 per cent to 23 billion, double the industry average growth, said: "It's hard to see how banking consolidation is going to happen to any material extent.

"When you see the shares of the large players now I don't think we are going to see the consolidation you have seen in the last decade. That's past."

The biggest takeover in the sector was in 2008 when competition rules were waived to allow Lloyds TSB to snap up a near-collapsed HBOS.

But Peacock, whose group's profits rose to 164m in the year to end-September from 107m the previous year, said Clydesdale and Yorkshire Bank had the strength to take on new entrants into the UK banking market.

They include NBNK Investments, a new vehicle set up to acquire bank assets owned by the government, Virgin Money and Santander's expanded presence.

"We have always welcomed competition. There's still a huge concentration (of market share] in the hands of the bigger banks. There's plenty of room for new entrants," Peacock said.

Amid political criticism of British bank lending levels, Clydesdale and Yorkshire revealed it had advanced 4.7bn of credit in the year, including 2.7bn of business lending and 1.7bn of mortgage advances. It said it remained on track to deliver the 10bn of lending over two years it promised last October.

Peacock said the sharp rise in retail deposits was "not through chasing best-buy prices" but by individual customers seeking a brand they can trust after the financial crisis.

Parent NAB posted a 19 per cent rise in earnings to A$4.6bn (2.83bn) powered by business banking and the wealth division.