Bank takes a £670m hit over mis-selling scandals

David Thornton, CEO of Yorkshire Bank
David Thornton, CEO of Yorkshire Bank
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Yorkshire Bank’s parent company NAB has taken a £670m hit to cover various mis-selling scandals in a move seen by analysts as a precursor to NAB selling Yorkshire and its sister bank Clydesdale.

Yorkshire and Clydesdale have set aside £420m to cover payment protection insurance (PPI) mis-selling and a further £250m charge for compensation for the mis-selling of interest rate hedging products.

Analysts said the higher than expected write-downs suggest NAB’s new chief executive Andrew Thorburn is tidying up the banks’ balance sheets before putting them up for sale.

Australian investors in NAB see the two British banks as a costly drain on resources. While the UK economy was plunged into financial crisis seven years ago, Australia and New Zealand were left relatively unscathed.

While NAB’s woes are nowhere near the problems of the leading British banks, Australian investors are losing patience.

Mr Thorburn said he would say more about the group’s plans for the two British banks when the company announces annual results at the end of October.

“Taking these decisions gives us more clarity going into the future and allows us to focus on the core Australian and New Zealand franchises, which remain in good shape,” said Mr Thorburn.

His comments were seen as a clear sign that Yorkshire and Clydesdale Banks are no longer core and will be put up for sale as soon as the mis-selling legacies are laid to rest.

Profits warning: Page 16.