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NAB plans Clydesdale Bank and Yorkshire Bank demerger

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  • 07/05/2015
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Clydesdale Bank is to be sold off in a demerger by National Australia Bank (NAB) which will see the business acquired in part by shareholders with the remainder listed on the open market.

The group, which includes Yorkshire Bank, will be sold off in a deal which is expected to be finalised by the end of the year. Some 70 to 80% of the bank will be purchased by NAB shareholders, with the remaining 20 to 30% to be acquired in a sale of shares in an initial public offering.

In order to proceed with the demerger, the Prudential Regulation Authority has required NAB to prop up Clydesdale Bank and its subsidiaries against any potential losses relating to legacy costs, which include its involvement in payment protection insurance and interest rate swap mis-selling.

Last year, NAB announced that it was considering selling its UK businesses after financial year results revealed a £420m provision for PPI and £250m for interest-rate swap mis-selling for the UK businesses.

Clydesdale’s half yearly results to 31 March 2015 showed operating expenses were down by £4m, due to a one-off pension scheme gain in the half, combined with conduct charge issues of £13m.

Net mortgage lending grew by 14.5% to £28bn. Growth was driven by demand among first-time buyers and remortgaging customers. The bank’s gross mortgage lending figures were not available.

Underlying profits dropped by 1.4% on the same period last year to £142m but increased 2.2% on the September half.

Debbie Crosbie, acting chief executive, said the bank continued to ‘punch above its weight’ in the mortgage market and was well placed to grow in the market as a standalone business.

“We believe the foundations of a strong standalone future have been laid in the progress made restructuring and refocusing our business and this is clear in our half year results. Pre-tax cash earnings are up a third to £118m, charges to provide for bad and doubtful debts more than halved and mortgage lending is up £2.4bn,” she said.

“There’s more work to be done as we move the business forward and build a better bank for our customers. Oversight and governance of historical PPI complaints have been completely overhauled and comprehensive programmes are underway to put this right to ensure we are doing the right thing by our customers.”

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