Has Clydesdale missed the flotation boat?
After years of crying wolf it would appear the analysts Down Under have finally called it right on the future of Clydesdale Bank.
Together with the Yorkshire Bank it looks likely to be sold by parent company National Australia Bank (NAB). Officially, NAB is considering a broad range of options, but a stock market listing has been the preferred route for some time. The problem now is whether it has missed the flotation boat and whether any trade buyers are out there if an initial public offering (IPO) is ruled out.
The under-performing UK banks have been a thorn in the side of NAB for years and there has been a clamour from the Australian banking analysts for it to dispose of them. Now they seem to have got their wish.
“While our Australia and New Zealand franchises are in good shape, it is disappointing to record a full year result that includes A$1.5 billion after tax in UK conduct provisions and other impairments,” said NAB chief executive Andrew Thorburn in the full-year results published today. “We need greater urgency dealing with our remaining low-returning assets.”
Thorburn, who took over in August, has wasted little time resolving the long-running issue, though a lack of detail as to timing, method or price of a sale left analysts once again to speculate.
Clydesdale’s troubles, including bad property loans and mis-sold payment protection insurance, could not remain under the radar in spite of claims made in the UK that the bank was not tainted by the scandals surrounding its bigger rivals. It was also fined £8.9m over a mortgage blunder which left 22,000 homebuyers with unexpected increases in their monthly repayments.
Unfortunately for NAB, the dithering over the future of its UK banks means it has missed the flotation boom. Investors have cooled on new issues and in recent weeks two banks have pulled their flotations: Aldermore has no new date, while Virgin Money was due to come to market this month. It still aims for an IPO before the end of the year.
These delayed issues, which also include Miller Homes, indicate how much investors have lost appetite for all but the biggest and most robust offers for sale. Two banks have floated this year – One Savings and TSB – but banks are still being treated with caution by the markets.
Clydesdale and Yorkshire, once regarded as a vehicle for NAB to acquire assets and build a greater UK and European presence, are now the rump of its business in the northern hemisphere after it disposed of two banks in Ireland and Northern Ireland.
NAB had been tipped to acquire the bundle of branches that Royal Bank of Scotland was forced to sell by the European Union as a condition of receiving state aid. Its decision to pull out of the auction left many commentators to believe it was its last chance to develop a more meaningful presence in Europe. Indeed, it was the clearest indication that the writing was on the wall and that disposal was inevitable.
The banks are regarded as lacking in clear strategy and what role they are expected to perform in a changing environment. Without a new owner soon that sense of drift could continue.