Clydesdale Bank exit 'still a priority', says NAB

Clydesdale Bank has been seen as a drag on its parent company's performance

Exiting from the Clydesdale Bank this year remains a priority, its Australian parent company has said.

National Australia Bank's (NAB) comments came as it provided the market with an update on the business.

In May, NAB announced its intention to pursue a demerger and then float the Clydesdale.

The Glasgow-based lender, which includes Yorkshire Bank, is to have 70% to 80% of its shares transferred to existing NAB shareholders.

The remaining 20% to 30% of shares in a new entity, known as "listco", will be offered to institutional investors.

Shares are to be listed on the London Stock Exchange and traded also on an Australian market.

NAB has spent several years trying to find a buyer for the Clydesdale, which constitutes NAB's European retail division.

NAB's new chief executive, Andrew Thorburn, said last autumn that shedding the UK subsidiary was a high priority for 2015.

It has been seen as a drag on the Australian lender's performance, with the parent company taking on a troubled commercial lending book worth £5.6bn in order to strengthen the subsidiary.

'Complex undertaking'

In its update on Tuesday, NAB said: "Material work on a potential demerger and IPO (by way of institutional offer) of Clydesdale is continuing.

"The transaction is a substantial and complex undertaking subject to a range of risks and issues, including shareholder vote, regulatory approvals and board approvals.

"An exit from Clydesdale within this calendar year remains a priority for NAB."

It added: "Should the separation occur, Clydesdale will be one of the leading mid-sized retail and SME banks in the UK, with long established franchises in core regional and select national markets, a strongly capitalised balance sheet, and an experienced new leadership team in place to deliver on the business's clear strategic priorities of driving growth and returns."

The Clydesdale Bank was founded in Glasgow in 1838. It has been owned by NAB since 1987, having previously been owned by Midland Bank.

Yorkshire Bank was founded in 1859.