Martin Flanagan: Clyne’s army is at the foot of the speculation hill just now

But the UK arms of National Australia Bank (NAB) are refusing to play ball as regards the banking consolidation carousel. In fact, the Aussie parent bank seemed to douse the carousel’s lights yesterday and turn off the music. Hey‑ho, we’ve been here before.

NAB UK is regularly touted as a key banking consolidation player, not least by Cameron Clyne, the chief executive of its parent company. Like the Grand Old Duke of York, Clyne has regularly marched the speculation army to the top of the hill before marching it down again.

As the nursery rhyme nearly goes: “When the takeover rumour was up it was up, and when it was down it was down, and when it was only halfway up it was neither up nor down… ”

It is well known, though unconfirmed, that NBNK, the UK banking consolidation vehicle chaired by City seigneur Lord Levene, had been in talks with NAB UK about a potential reverse takeover deal. NBNK currently has no branch network but a lot of wealthy institutional backers – i.e. money without mortar.

If successful, such a deal would have given NBNK between 2 and 3 per cent of the UK banking market, and if the vehicle was subsequently successful in buying the 630-plus Lloyds branches on the auction block it would have about 7 per cent of the market.

This would have pleased Vickers and company, who in the ICB’s final report last week obviously saw the mechanism of tying the Lloyds branches to an existing banking network as an elegant solution.

But NAB’s finance director, Mark Joiner, poohed‑poohed the idea of Clydesdale and Yorkshire being part of any such exercise yesterday.

He said now would be a terrible time to sell the UK business and he also stated that NAB would not buy the Lloyds branches. The UK banking market was at the bottom, said Joiner, so the Aussie parent would be unlikely to get a decent price for its assets here.

And, rubbing salt in the wounds, he posed the legitimate question as to why NAB should buy the Lloyds branches and increase the parent’s exposure to the UK when we are likely to be walking into economic headwinds for anything up to a decade?

Admittedly, it was known anyway that NAB UK had not made the shortlist for the Lloyds branches. That shortlist has been narrowed down to NBNK, the Co‑operative Bank and financial investment firm Sun Capital.

But Joiner’s straight-from-the-shoulder remarks seemed to set out NAB’s UK strategy definitively. That looks to be more than ever to plough on organically for the medium term, at least, without any fire sale or increased UK exposure.

It sounds short on excitement, but following the turmoil in the sector since 2007 who wants exciting banking?

Department stores facing up to a long haul ahead

PROFITS ahead of margins seems to be the department store sector’s maxim from the retailing rockface given the perilous state of the high street.

John Lewis recently revealed it had seen both profits and margins under pressure through sticking to its “never knowingly undersold” slogan and cutting prices to match competitors.

One of its main competitors, Debenhams, said yesterday that gross margins for the year to early‑September would be flat to slightly down, again as a result of cutting prices to grow market share in the difficult trading environment. Debenhams is helped by not having such a big‑ticket selling offer as John Lewis – it is more scents than sofas. But its underlying sales were down 0.3 per cent over the year and up just 0.4 per cent in the nine weeks to 27 August.

Debenhams is looking to the internet and overseas to take up some of the slack from the depressed UK environment. But it looks a long haul.