THE NEW chief executive of Yorkshire and Clydesdale banks has told Australian shareholders about the growth potential of their UK operations, which have long been blamed as a drag on group earnings.
National Australia Bank introduced David Duffy to analysts and investors via a conference call yesterday morning and reiterated its priority to sell the business before the end of the year.
Mr Duffy said in a statement: “Work continues towards the potential demerger and IPO, by way of institutional offer, of Clydesdale. While we’re some way from a final decision on whether to proceed with the process, which is subject to a range of risks and issues, including shareholder vote, regulatory approvals and board approvals, it’s an exciting time for us.
“Today’s presentation for NAB shareholders is a good opportunity for us to tell the story of where we are now, where our opportunities lie, what our strategy is, and how we intend to deliver on that strategy.
“I’ve been with the bank for a month now and I’m personally very excited about the road ahead. We will provide further information to shareholders at the appropriate time, should the decision be made to pursue the demerger and IPO.”
The continuing economic recovery should favour a flotation and generate a windfall for Australian investors who have griped about the UK business for years.
In his presentation, Mr Duffy highlighted Yorkshire and Clydesdale’s established presence in the retail and SME banking sectors, claiming they are well placed as challenger banks given their position as the UK’s largest mid-sized lenders.
Mr Duffy also highlighted the “long-established franchises, strong community brands, standalone and scalable technology platforms, profitable and strongly capitalised balance sheet, clear strategy and experienced leadership team”. NAB plans to demerge 70-80 per cent to existing shareholders and launch an initial public offering of 20-30 per cent to institutional investors.
Analysts at Deutsche Bank has calculated the business will be worth between $3.4bn to $4bn.
Mr Duffy gave an insight into the future strategy for Yorkshire and Clydesdale, setting out plans to continue to grow the mortgage book, enhance cross-selling across existing and new retail customers and expand the personal current account customer base.
In the SME business, he wants to deepen existing relationships, run off the low-yielding £1.4bn portfolio of loans and expand in selected products and sectors.
Mr Duffy said the lenders will continue to strengthen their digital platform, “optimise and align” physical footprint, develop enhanced customer data management and analytics and digitise and simplify customer processes.
Previous CEO David Thorburn led a turnaround of the underlying performance of NAB’s UK operations, but the improvement has been overshadowed by legacy conduct issues such as mis-selling of payment protection insurance and SME loans which have required provisions of £1.7bn.