Yorkshire Bank owner to fire gun on IPO marketing

David Duffy
David Duffy
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THE OWNER of Yorkshire and Clydesdale Bank is expected to announce the price range for its initial public offering early next week, bringing long-awaited independence one step closer.

National Australia Bank will then fire the gun on full-blown marketing of the IPO to institutional investors in London, New York and Australia.

David Duffy, the charismatic new chief executive and former Goldman Sachs staffer, will lead the efforts as he promotes Yorkshire and Clydesdale as Britain’s number one challenger bank.

The range will reflect the upper and lower expectations for how the shares are priced based on demand from the market.

The lender is expected to have a market capitalisation of between £2bn to £2.5bn once the process is complete.

The first day of conditional trading for the shares is set for February 2. NAB will complete its eagerly-anticipated exit from the UK a week later following the demerger and IPO.

The transaction will result in independence for Yorkshire Bank for the first time in nearly 100 years.

The new holding company, known as CYBG plc, has its registered office in Leeds, meaning that Yorkshire will gain a new FTSE-250 listed entity, although the head office will continue to be in Glasgow.

The logic behind the move is believed to be the removal of uncertainty for investors in the event of a future Scottish referendum vote.

It would also ensure continuity for CYBG with the Bank of England as the lender of last resort.

The Leeds location also reflects the dominance of the Yorkshire Bank brand, represented by its 154 branches versus Clydesdale’s 121.

In a third quarter trading update, CYBG said trading in the three months to December has been in line with board expectations.

It said momentum in the loan book has been maintained with 6.6 per cent year on year growth in mortgages.

CYBG said core lending balances for small and medium businesses were stable and the run-off of non-core business lending continued as planned.

In an encouraging sign for the health of the UK economy, particularly in Yorkshire and Scotland, it said asset quality remains strong with continuing low impairment charges in the quarter.

The lender also saw its investment in products and services continue to pay off as it added new personal and business customers.

Offers such as £150 for current account switching and 25-months free business banking helped bring in 28,930 new accounts, delivering net growth in the period.

CYBG said its funding position remains strong and deposit balances grew compared to September 2015. The net interest margin - the spread between interest paid out and interest earned - was stable at 2.2 per cent.

NAB has set aside £1.7bn to provide against conduct issues, including the mis-selling of payment protection insurance and toxic SME loans.