YORKSHIRE Bank and its sister Clydesdale will float on the stock exchange, and close more branches, as parent company National Australia Bank (NAB) makes its long-awaited exit from the UK.
Up to 30 per cent of Clydesdale, which also includes Yorkshire Bank, will be sold to institutional investors before the end of this year. The remainder will be held by shareholders of NAB, the group which has owned Clydesdale since 1987 and Yorkshire since 1990.
The UK business, which has about 7,000 staff and more than 300 branches, has long been the subject of sale speculation after it racked up hefty losses for NAB through property loans that turned sour.
Last month, Clydesdale Bank was fined a record £20.7m after it was found thousands of Payment Protection Insurance (PPI) complaints may have been rejected unfairly.
Discussions with regulators over the proposed split are ongoing, with the UK’s Prudential Regulation Authority demanding that NAB sets aside up to £1.7bn to cover potential losses from mis-selling and other conduct issues.
In a statement, NAB said the exit is a “substantial and complex undertaking, subject to risk and addressing a number of issues, of which the most substantive is conduct mitigation”. A bank spokesman said the £1.7bn was a form of “security blanket, that NAB has to hold for the worst case scenario”.
It was also confirmed that 19 bank branches are closing, including those in Driffield, East Yorkshire, Featherstone, Elland and Leeds York Road, in West Yorkshire, and Barnsley New Street in South Yorkshire.
A Yorkshire Bank spokesman said: “None of these decisions were taken lightly... they are all under-performing branches, in terms of footfall and new business. There is no impact on jobs, we will redeploy staff to other locations.”
The spokesman said Yorkshire Bank planned to deliver 18 branch facelifts and create a new flagship branch in Leeds.
He added: “We’re also refurbishing the Peel Square, Barnsley branch, which is a significant investment to create a stand-out presence in the town, in a key shopping location.”
Debbie Crosbie, Clydesdale’s acting chief executive, said: “Today’s announcement marks the beginning of an exciting new opportunity for Clydesdale and Yorkshire Banks. Our performance is improving and we’re providing real customer choice in the UK which is driving encouraging growth across our target retail and SME markets.”
When asked why nobody senior had resigned following the fine over PPI enforcement action, Ms Crosbie said she wouldn’t comment on individuals, but she re-iterated the bank took cases of mis-selling “very seriously indeed”.
In the statement, Clydesdale said: “In line with the UK banking industry, the level of PPI claims continues to be monitored and provision is subject to significant risks and uncertainties. The total costs associated with conduct related matters remain subject to a range of uncertain factors.”
Half-year results showed the pre-tax earnings rose 33 per cent to £118m.
The foundations have been created for a strong standalone Yorkshire Bank, according to Debbie Crosbie, the acting chief executive.
She added: “There’s more work to be done as we move the business forward and build a better bank for our customers.
“Oversight and governance of historical PPI complaints have been completely overhauled and comprehensive programmes are underway to put this right to ensure we are doing the right thing by our customers.
She added: “The strong start we’ve made since the beginning of 2015 means we’re well placed to build on our organic growth plans.”