It is proposed that 75% of the demerger will go to NAB shareholders, while the remaining 25% will be released on the London Stock Exchange and Australian Securities Exchange to institutional investors.
The banks will float under the trading name CYBG, and will see shareholders retain their existing shares, while eligible shareholders will receive one security for every four NAB shares owned.
Directors at NAB have voted unanimously to recommend that the demerger is in the best interests of its shareholders, and believe that it is likely to enhance value for them in the long term.
A spokesman for Clydesdale Bank said that the demerger meant it would be able to set its own strategy for the first time since the bank was independent around 80 years ago.
“We’ve not really talked much about strategy, but the intermediary mortgage market will continue to be an important part of what we do,” he said.
On 27 January, the bank will hold a scheme and general meeting to consider the proposed capital reduction of shares as part of the demerger.
NAB chairman Michael Chaney said: “In recent years, NAB has taken a number of steps and initiatives to strengthen CYBG’s standalone position. The NAB directors are of the view that CYBG is now in a position to be demerged to NAB shareholders and be listed as a standalone retail and SME bank with a strong franchise across its core regional UK markets, a strong balance sheet and capital position, a robust business plan and operating platform, as well as an experienced management team.
“The demerger provides eligible shareholders with separate investments in NAB and CYBG and if they choose to retain their CYBG securities, the ability to benefit from any improvement in the UK economy and CYBG’s strategy and performance going forward,” he added.