Relief as Yorkshire Bank makes debut with leap in share price

The share price jump came as a relief after the float was delayed by a day after a request for more information from an unnamed rating agency.

Parent company ​​National Australia Bank had said the request could result in a downgrade of the Clydesdale​ and Yorkshire​‘s deposit rating.

​​David Duffy, chief executive of Yorkshire Bank’s parent company CYBG, said the IPO was a “landmark day” as Yorkshire and Clydesdale celebrate becoming an independent banking group for the first time in almost a century.​

“It’s a big day for us,” he said.

“It’s nearly 100 years since this bank was independent. It’s a remarkable day. There’s no uncertainty about the future.”

Yorkshire and sister bank Clydesdale have been in limbo for more than a decade over fears that parent bank NAB would sell or cut loose its British banking operations. NAB’s core business in Australia has remained largely untouched by the banking crisis and investors have become impatient with mis-selling scandals such as PPI at Yorkshire and Clydesdale, scandals that have plagued nearly all the British banks.

Going forward, Mr Duffy said Yorkshire will target growth in its mortgage and SME books and will invest in new technology.

A key development will be the roll out of a mobile platform.

“Customers can open a bank account in 11 minutes with no need for paperwork or branches,” said Mr Duffy.

“We will roll this out to all Yorkshire customers in the next couple of months and then we’ll roll out an SME version. We’ve opened a big SME flagship in Leeds.”

He dismissed suggestions that the float was overshadowed by the delay to the IPO.

“Yesterday’s news was something we created deliberately. It’s a technical issue” he said.

Chief financial officer Ian Smith added: “The rating agency was asking us for information. The right thing to do was to talk to investors, allowing them to listen to us. Everyone then signed up.”

Talking about the share price increase, Mr Duffy said: “It shows we priced it fairly, but we’re not that focused on the price. We’ve gained independence.”

Following the float, London Stock Exchange said it welcomed CYBG to its markets, the fifth UK challenger bank to list in London in less than two years.

Asked whether he could see consolidation taking place among the challenger banks, Mr Duffy said: “That’s not our priority right now. We are the largest challenger in the market and the only one with full SME capability. Doubtless some people may approach us.”

He confirmed that CYBG will look at RBS’s Williams & Glyn division, which was put on the market last month.

CYBG’s shares closed up 12p at 192p on Wednesday.

The shares were priced at 180p, towards the lower end of a 175-235p indicative range, which some analysts had considered “aspirational” given recent falls in share markets.

NAB, which bought ​Yorkshire and ​Clydesdale in 1987, ​sold 25 per cent of the unit in the IPO.

Stockbroker ​Redmayne-Bentley welcomed the independence of CYBG, which has its registered office in Leeds.

Keith Loudon, senior partner, said: “A sound regional bank is always good news for its region.

“For the Northern Powerhouse to have a finance facility not tied to London’s coat tails is a real plus.

“Yorkshire Bank has a great long-term profile in our area. I am sure they will build on this foundation.”​

Yorkshire and Clydesdale have faced turbulent conditions in the past after NAB had to factor in £500m of extra provisions last year to cover PPI and other mis-selling scandals. £420m was put by to cover potential PPI mis-selling and up to £80m for any further charges relating to interest rate hedging products.

Yorkshire Bank was founded in 1859 in Halifax by Colonel Edward Akroyd, who wanted to provide a means of saving for the working classes.

Anyone could open an account with as little as a penny and in the first year of business, almost two million pennies were invested.

Colonel Akroyd died in 1887 after seeing his dream flourish.

His funeral was attended by 15,000 people who crowded the streets outside All Soul’s Church in Halifax.