BNK Investments, which lost out in the auction for 632 Lloyds branches, is in talks with National Australia Bank (NAB) about acquiring the Clydesdale and Yorkshire banks. The Scotsman has learned.
The buy-out vehicle has reopened negotiations after NBNK chairman Lord Levene failed last year to acquire a batch of branches from Lloyds Banking Group and combine them with the Australian bank’s UK operations.
NAB last month announced a strategic review of Clydesdale and Yorkshire and NBNK has made contact again to try to hammer out a deal.
One source close to NBNK said: “NAB UK is the one clearly available acquisition target for NBNK in the UK. Clydesdale Bank and Yorkshire Bank need to have their rightful place in the UK financial services landscape, which NBNK could achieve.
“They [NAB] have announced a strategic review of the UK business. NBNK will look at it. What else would they be doing? They would be in pole position. It’s difficult to see other domestic bidders given possible regulatory complications.”
NBNK was set up to help consolidate the British banking industry in the wake of the financial crisis and is backed by an array of major City institutions including Baillie Gifford, F&C Asset Management, Invesco Asset Management, JP Morgan Asset Management, and UBS.
Levene is the recently-retired chairman of insurance market Lloyd’s of London and a former vice-chairman of Deutsche Bank. Other NBNK’s directors include Lord McFall, former chairman of the Treasury select committee, and Conservative peer Lord Forsyth of Drumlean, the former Scottish secretary.
Ironically, it is believed NBNK’s advisers think a takeover would be more acceptable to politicians and regulators now that the group is out of the running for the Lloyds branches because there would be little overlap between Clydesdale and Lloyds TSB outlets in Scotland. Clydesdale has 152 branches and Yorkshire 185. As such, analysts believe job losses following any successful takeover would be minimal.
It is also thought Holyrood would raise few objections because the uncertainty over NAB’s commitment to its UK business, which has contributed to credit rating downgrades, is unwelcome given the recent shocks to the Scottish financial sector.
One source said: “NBNK’s objective would be to grow the business. They don’t think Clydesdale and Yorkshire can shrink themselves to success.
“With Clydesdale, NBNK could create a good news story for the Scottish financial sector after the malaise in the wake of the shocks at RBS and HBOS.
“That’s better than the current ‘Will NAB sell it, or won’t they sell it’ situation that is providing no clarity for customers or employees.”
NAB UK, now under chief executive David Thorburn and before him Lynne Peacock, have taken a lot of cost out of the business in recent years, and traded profitably through the downturn, avoiding the sub-prime lending debacle.
NBNK declined to comment. A spokesman for NAB UK said: “We would not comment on market speculation.”