Flotation rumours denied for Yorkshire and Clydesdale banks

The parent company could push the button on a listing of the pair at the end of this year, according to a report in The Sunday Times.

Industry sources added that the banks could be sold to a rival keen to strengthen its presence in the UK, such as Santander.

A spokesman for Yorkshire and Clydesdale told the Yorkshire Post: “No comment on market speculation and rumour I’m afraid.”

Banking analysts in Australia have been ramping up talk of a UK exit for NAB since the start of the year.

Macquarie Group said the lender remains committed to its plan to sell the UK franchise, but not at any price.

Given the improving UK economy, it may well be that it can get a better price this year, added Macquarie.

David Ellis, an analyst at Morning Star, told the Yorkshire Post last month that improved economic conditions in the UK are a definite positive for NAB.

The improving economy could bring forward a UK departure via a sale; conversely if operating conditions continue to improve then the scaled-down banks could start making acceptable returns, he said.

Improved commercial real estate values will also be positive for the portfolio of bad loans and accelerate the run-off of the portfolio, he added.

Mr Ellis said: “I still don’t expect a resolution in the short term, possibly later this year at the earliest, but more likely next year assuming NAB can get close to book value in the case of a sale.”

TSB is among the banks hoping to take advantage of the improving economy with an initial public offering.

The lender, part of Lloyds Banking Group, plans to start the process in the middle of this year.

The Sunday Times said smaller banks Aldermore and One Savings are also planning IPOs.

Yorkshire and Clydesdale banks reported a statutory loss of £27m in 2013, a vast improvement on the £470m loss in 2012.

But the improved trading performance, helped by a deep cost-cutting programme, has been overshadowed by a series of reputation-damaging “legacy conduct matters”.

Continuing uncertainty over the scale of mis-selling issues may present a challenge to NAB and existing and new investors.

Yorkshire and Clydesdale had to increase the provision for payment protection insurance by £130m to £152m in the year to September 2013.

The pair took a £104m hit over the same period to cover mortgage payment irregularities and the mis-selling of interest rate hedging products and credit card protection.

David Thorburn warned in November that a strong focus on conduct issues will remain a feature of the banking industry.

Santander, which has 3,200 staff in Yorkshire, said last month that there were no current plans to float its UK business, but added the long-awaited listing remained a medium-term objective.

The UK arm delivered a vastly improved performance in the final six months of 2013.

It was formed from the takeover of Abbey, Alliance & Leicester and part of Bradford & Bingley.

Santander took over Bradford & Bingley’s savings accounts and branches, and the Government took control of its mortgages and loans, following the bank’s collapse in 2008 due to massive bad debts.