National Australia Bank to Spin Off, List U.K. Business by February
December 06 2015 - 11:31PM
Dow Jones News
By Robb M. Stewart
MELBOURNE, Australia--National Australia Bank Ltd. (NAB.AU) aims
to spin off and list its U.K. business by early February as the
lender tightens its focus on more profitable operations in
Australia and New Zealand.
Investors will be asked to vote at a meeting scheduled for Jan.
27 on a plan to hand 75% of the business to shareholders and sell
the remainder to institutional investors via an initial public
offering, the bank said Monday.
If the move is approved, shareholders will receive one share in
the U.K. banking business for every four NAB shares they own.
Analysts and shareholders have long expected NAB to quit the
U.K., where it failed over the last decade to consummate a sizable
acquisition and which its management believes lacks the scale to
compete effectively.
Andrew Thorburn, who took over as NAB's chief executive in
August last year, has hastened the bank's exit from overseas
markets. He has already led the bank's exit from the U.S., selling
the remainder of regional bank Great Western Bancorp Inc. earlier
this year after selling a minority stake via an IPO in 2014.
On Monday, the bank said Chairman Michael Chaney and directors
unanimously recommend shareholders vote in favor of a sale of the
business, known as CYBG PLC. An independent export also concluded
the demerger is in the best interests of shareholders, it said.
"The demerger provides eligible shareholders with separate
investments in NAB and CYBG and if they choose to retain their CYBG
securities, the ability to benefit from any improvement in the U.K.
economy and CYBG's strategy and performance going forward," Mr.
Chaney said.
For NAB, the exit from the U.K. is expected to improve its
return on equity and capital generation as the bank focuses on
more-profitable core businesses, Mr. Thorburn said.
NAB bought Glasgow-based Clydesdale Bank in 1987 for 420 million
pounds (US$635 million) before picking up Yorkshire Bank in 1990
for about GBP900 million. The businesses were hard hit by soured
property loans and rising funding costs as the U.K. struggled
through recession. In recent years the division has racked up
provision charges for legacy misconduct allegations for wrongly
selling certain financial products.
In April, the U.K. operation was fined by the U.K.'s Financial
Conduct Authority for how its how it dealt with customer complaints
over the sale of payment-protection insurance. NAB moved in May to
shore up its capital base and ease its exit from the U.K. with a
A$5.5 billion rights issue, helping meet a call by the U.K.
prudential regulator to inject GBP1.7 billion in capital before
listing the business to cover possible losses.
In addition to support from shareholders, the plan is
conditional on court and final regulatory approvals.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
December 06, 2015 23:16 ET (04:16 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
National Australia Bank (ASX:NAB)
Historical Stock Chart
From Jun 2024 to Jul 2024
National Australia Bank (ASX:NAB)
Historical Stock Chart
From Jul 2023 to Jul 2024