There will be no fire sale of Clydesdale says owner NAB

Mark Joiner, executive director for finance at National Australia Bank (NAB), also definitively ruled the group out of the auction for the 630-odd Lloyds branches that are up for sale. There would be no point bidding, he argued, when the UK economy was expected to be “on its knees” for the next decade.

Joiner said any sweeteners offered by Lloyds would not alter the Australian bank’s stance.

NBNK is understood to have approached NAB with a view to buying its A$4.2 billion‑plus (£2.8bn) of UK assets, centred on its 330 Clydesdale and Yorkshire branches, as a platform to mount a bid for the Lloyds branches.

But Joiner, speaking in Australia yesterday, said: “The UK business does not lose money. The [UK] market is at the bottom and so is [the value of] sterling. It is a rotten time to sell. There will be no fire sale.”

He said NAB had no need to beef up its capital cushions and flagged a possible sale or flotation of the UK subsidiary farther down the line.

“We would prefer to own the asset [NAB UK], raise the returns and exit a few years later, or IPO it [float it on the stock market]. There are options,” Joiner said.

NAB UK, hit by the faltering economy, has a single‑digit return on equity compared to 16 per cent at its parent. However, NAB’s finance boss said Clydesdale and Yorkshire were expected to return to a low teens return, but without giving a timeframe.

NAB UK had not made the three‑strong shortlist of bidders for the Lloyds branches, ordered to be sold off by the European Union in return for the bank’s £17bn taxpayer bail-out following its acquisition of HBOS.

The bidders left in the frame are understood to be NBNK, the Co‑operative Bank and financial investment group Sun Capital.

However, NAB had remained on the periphery of the sale discussions. Talk of it gatecrashing the auction was rekindled after news that the terms of any deal might be changed, with the buyer reducing the size of the Lloyds loan book it took on.

But Joiner commented: “Why do we need to bias our capital to the UK when the economy is expected to be on its knees for ten years or so?

“There are growth opportunities in Australia. The fact that they [Lloyds] may sweeten the deal does not change anything for us.”

NBNK, chaired by City grandee Levene, declined to comment yesterday. It has previously said it was in talks about a possible acquisition, but never confirmed it was NAB UK.

Clydesdale and Yorkshire have a joint 2-3 per cent market share of UK retail banking, and together with the 4.5 per cent of assets put on the block by Lloyds would have potentially given NBNK about 7 per cent.

The Independent Commission on Banking, which published its final report last week, has said it is in favour of the Lloyds branches going to a buyer that would emerge as a strong contender to the “big five” in UK banking.

l Lloyds is looking for a buyer for commercial property loans worth £1bn, sources said yesterday. The sale is being handled by investment bank JP Morgan Cazenove.

Lloyds, 41 per cent owned by the taxpayer, revealed last month it had already sold £1.8bn worth of commercial property loans in the first half of this year.

The bank has been dogged by a legacy of bad debts from its government‑brokered rescue takeover of HBOS in 2008.

COMMENT, PAGE 4