Clydesdale And Yorkshire Bank Ipo: Nab Launches Cut-Price Share Offer

[Sancho Panza]

Evening Standard 18/1/16

'National Australia Bank has launched a cut-price offer of shares in its Clydesdale and Yorkshire Banks offshoots.

The London stock market float will value what has been renamed CYBG at between £1.54 billion and £2.04 billion which, even at the top end, is some £200 million less than the price that was being suggested as recently as last month.

NAB finance director Craig Drummond admitted the bank had been compelled to scale back its ambitions for the valuation of Clydesdale after the recent fall in equity markets.

“There’s no question it’s a little lower. It’s not dramatically lower but it’s a little lower than we would have expected, and it’s a little lower for the obvious reason that markets are volatile and a bit soft,” Drummond said.

The Australian bank is planning to sell 25% of its holding in Clydesdale and give the remaining 75% directly to its own shareholders.

Dealings in the shares, which will be offered in a price range from 175p to 235p, are due to start on February 2.

Management, headed by chief executive David Duffy who previously ran Allied Irish Banks, has begun a series of roadshows with potential investors in London and will travel up to see Edinburgh fund managers later in the month.

At the lowest end of the valuation Clydesdale would be sold at just 0.56 times book value which is not only considerably lower than the average UK bank — whose shares trade at 0.76 times book value — but much lower than some of its rival challenger banks.

Metro Bank has been talking about a flotation which could value it at three times book value even though it has never made a profit.

NAB has looked at selling or floating Clydesdale (and Yorkshire) for decades but hit a huge stumbling block when the PPI mis-selling scandal broke five years ago.

Last year it was fined £20.6 million by the Financial Conduct Authority for the poor way it handled PPI complaints and NAB had to stump up £1.6 billion to cover future liabilities ahead of the float.

The Australian bank expects to make a “significant” accounting loss on the spin-off and float.'

Some of the problems at Yorkshire Bank were covered in this thread 2 years ago where it appeared they were issuing capital calls to mortgagors.My interest was piqued by an acquaintance who had been lent rather a large-some would say insane-amount of money to develop some flats and sell them for more than houses were going for on the same street in 2006.

NAB,aka Yorkshire Bank/clydesdale,pulling The Plug On The Uk? 13/7/13

Fast forward to now and it seems that they've progressed the clean up of their book enough to clear the way for their exit.

What seems odd is that they're only selling 25% of the business and are doing so at a considerable discount to the supposed prevailing market.

I wonder which lucky pension funds are buying the 25%?

[long time lurking]

Sounds like a game of pass the parcel ,but the winner could find they are holding a turd ?

Edited January 18, 2016 by long time lurking

[TheCountOfNowhere]

I had a problem with floaters last night too.