NATIONAL Australia Bank (NAB) has ruled out a “fire sale” of its Clydesdale Bank subsidiary after unveiling plans for a restructuring in its home market, designed to save about £552 million a year.
However, chief executive Cameron Clyne, who is under pressure to improve shareholder returns, admitted that the group’s UK arm – which fell to its first annual loss last year – was “clearly a problem asset”.
At an analyst briefing to unveil NAB’s technology strategy, Clyne said the group had decided to take a long-term view of Clydesdale, rather than rushing into a “desperate fire sale” that shareholders did not support.
He added: “We will continue to manage the UK. There may be a point that we cut and take some issue with the UK, but I don’t think that is practical.”
Analysts at Credit Suisse claimed earlier this year that NAB could boost its market value by up to A$4.5 billion (£3.1bn) by spinning off Clydesdale as a separately listed entity. Santander was also rumoured to be mulling a £2bn bid for the business, but this was denied by the Spanish bank.
Clydesdale – which also owns Yorkshire Bank – fell to a pre-tax loss of £183m in the year to September after it was hit by a sharp increase in bad debts, but a trading update last month highlighted “pleasing” progress in the restructuring of the business.
Some 29 business banking centres have been closed and a £5.3bn commercial property loan book transferred to its parent group for run-off. In addition, some 1,400 jobs will be axed by 2015.
Under NAB’s latest cost-saving strategy, the Australian group is to simplify both its range of products and its technology in an attempt to encourage more customers to embrace internet banking.
Clyne said: “In a digitised world, we need to ensure we can meet the future needs of our customers regardless of when, how and where they choose to deal with us.”
Although the shake-up is aimed at saving about £552m a year, Clyne said this would be “partly offset” by higher software and implementation charges. Analysts at Deutsche Bank said: “In recent years NAB has already been delivering a higher level of productivity savings than this, and as such the market may be disappointed by the extent of the savings.”
NAB also unveiled a management shake-up that will see Steve Tucker, the executive in charge of its wealth management arm, leave after 25 years with the group. Tucker will be replaced by Andrew Haggar, who currently heads up human resources, marketing and communications.
Wholesale banking chief Rick Sawers will add personal and business banking products to his remit, while personal banking executive Lisa Gray will now take responsibility for the technology overhaul.
Finance director Mark Joiner is to retire at the end of the year and Clyne said the group would consider both internal and external candidates for his successor. Joiner will remain as chairman of JBWere, the private wealth firm in which NAB owns a controlling stake.
There will be no immediate changes to the group’s UK operations, which will continue to be led by chief executive David Thorburn.
A Clydesdale spokesman said: “The focus of the announcement was a technology and strategy update centred on the Australian geography, along with changes to the group executive. The announcement made clear there is no change in UK banking and that our restructure is well advanced.”