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Clydesdale may revise IPO price as markets slump

Clydesdale BankThe slump in equity markets is likely to force National Australia Bank to cut the £2-2.5 billion price tag on its flotation of Clydesdale and Yorkshire Banks.

NAB is expected to confirm its plans, including the flotation price, at a general meeting before the end of the month ahead of the listing which will restore Clydesdale’s independence for the first time since it was acquired by Midland Bank in 1920. It was sold to NAB in 1987.

The flotation has been long debated and was finally put on the agenda last summer when new NAB chief executive Andrew Thorburn took control of the Melbourne-based group.

Although not immune from the banking debacle of 2008 its systems already operate on a standalone basis, so it does not include the hefty separation costs and complex technology separation involved with the carveout of TSB from Lloyds Banking Group.

In an update on Thursday it said it continues to gain business and personal customers.  Referring to the holding company for Clydesdale and Yorkshire Bank (CYBG) it said: “Trading in the 3 months to 31 December 2015 has been in line with the CYBG board’s expectations.

“The CYBG Group continued to acquire personal and business current account customers, with 28,930 accounts opened, delivering net growth in the period.

“Momentum in the loan book has been maintained, with 6.6% annualised growth in mortgages during the period with good growth in owner occupied. Core SME lending balances were stable, and the run off of non-core business lending continued as planned.”

Net interest margin was stable and in line with guidance at 2.20% annualised, it added.

NAB intends that 75% of the floated bank will be distributed to its shareholders with the remaining 25% sold to institutions.

The group has 275 retail branches comprising 121 Clydesdale Bank and 154 Yorkshire Bank. There are 40 business centres.

London shares took another hammering as the FTSE 100 plunged 114.1 points to 5,804.1, its lowest level since November 2012, with only six companies in positive territory.

Investors continued to fret over falling demand in China, with mining stocks heading the slump. Anglo American (-11.5%), Glencore (-6.5%) and BHP Billiton (-6.4%) were the three biggest fallers.

Weak UK construction data and another drop in oil prices added to the gloom. Howard Archer, chief European and UK economist at IHS Global Insight said: “Another blow to hopes that UK GDP growth picked up in the fourth quarter of 2015 as construction output disappointing fell 0.5% month-on-month in November.

“This follows on from the even more damaging news that industrial production fell 0.7% month-on-month in November.”

Oil prices reversed the previous session’s gains amid continuing concerns about an oversupply in the market. In late afternoon trade Brent crude Brent crude plunged 5.2% to $29.34 per barrel and West Texas Intermediate tumbled 5.9% to $29.44 per barrel.


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